Ok, so I have a ,000 auto loan, and the trade-in value for my vehicle currently sits at ,500… I’m "upside down" in the loan as it would be referred to. I’m doing my best paying at this loan to get it down, but I wanted to know how long I need to wait to try and refinance the loan for a better interest rate? My current loan is a 7.05% rate for my new car, and my credit score is about 730. I’ve had the new vehicle for about 9 months. Also, will refinancing hurt my credit?
First, if you already have a 7.05% interest rate, you are not going to do any better, even if your credit score has improved lately. Anything above about 680 is not going to improve your rate.
Second, you won’t find any loan company that will loan you $23,000 for a car only worth $11,500, especially now in these times of tight credit.
In summary, refinancing is not an option for you. Your best (only) option is to simply keep paying down the loan you have, at least until you are no longer upside down.
A bank is not going to rewrite the loan until yout Loan-to-value ratio is in line. Some banks will rewrite a loan at 110% of value, some a little higher. But either way, when you are at 200% loan-to-value, its not going to happen.
A ‘refinance’ is essentially a new loan on your old car. They evaluate it just as if you were buying this car on the street. So the price of the car has to be in line with the actual value.
Lets assume it gets rewritten. Current loan rates are about the same as what you are paying. lowering your APR by a point, even 2 points is not going to make a significant impact on your monthly payment. Stretching the loan to a longer term will just guarantee you are upside down forever.
Did you roll the negative from your trade into this loan? Go in with little or no down payment? If so, you now see the consequences of that. Its a bad path to start down..
How long do you have to wait? If you are that flipped, its going to be a very long time…