Question
I want to refinance my car loan but my credit is worse than when I bought it? Bad idea?
I have no idea how refinancing works. I want to refinance my car loan hoping to make my monthly payments smaller. It's over 1/2 paid off now. Will it hurt me if my credit is worse? How does that work. I am current on my payments.
5 months ago - 1 answers
Best Answer
Chosen by Asker
Generally a refi means you pay more over the long run, because the term of your loan extends even longer. If you want to try this, first call up your existing lender and ask them a simple question: "How much would it be to pay off my existing loan in full?" That will be the amount you need to finance. Next, check the Kelly Blue Book (www.kbb.com) and see if your car is worth that much - if it isn't, you will have a very hard time refinancing, unless you can come up with the difference in cash. The reason is no bank wants to lend to someone who has no equity in the car. Next, call up a few credit unions and ask them for the used car financing rate. I like the pentagon federal credit union, but many others are also good. Ask them to quote you a payment on a loan for the amount you need for payoff, and how long it will take to pay it off. If this all looks good, then refi with the credit union. Otherwise, try to throw any extra money you get at the car loan so it is paid off faster.
by Lauren F
5 months ago
Asker's Rating: 