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Refinancing A Car Loan

T

Teodora Saylor

macrumors newbie
Original poster
Dec 9, 2014
13
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I always get good responses here :) I hope someone will also share their thoughts on this random question of mine. I just want to know how does refinancing work on a car loan. Is it true that most people refinance to save money? I want to understand the possible outcomes of refinancing a car before I jump into it. Thanks in advance.
 
I have never heard of anyone refinancing a car loan. If you are even thinking about it then you are so far upside down then refinancing won't help.
 
Foggydog said:
I have never heard of anyone refinancing a car loan. If you are even thinking about it then you are so far upside down then refinancing won't help.
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Not necessarily. Maybe you're becoming financially prudent, now, and you see that you're 1.0% interest rate is something you could potential refinance.

That being said, haven't done/heard of it. But remember a car is a thing that you take to get from point A to point B. I'm jealous of the people who are driving Teslas to work, but I know I make more than they do and I drive an old Civic and am saving a ton of money.
 
smallcoffee said:
Not necessarily. Maybe you're becoming financially prudent, now, and you see that you're 1.0% interest rate is something you could potential refinance.

That being said, haven't done/heard of it. But remember a car is a thing that you take to get from point A to point B. I'm jealous of the people who are driving Teslas to work, but I know I make more than they do and I drive an old Civic and am saving a ton of money.
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+1
 
D.T. said:
For some folks it's only to go from A to B, for others, there's many times the B doesn't matter :D
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Sure sure, I like cars and agree. But my point was that if you're concerned about the financials, then you should aim toward using it more toward utility and consider it as means of transportation and not something for fun.
 
smallcoffee said:
Sure sure, I like cars and agree. But my point was that if you're concerned about the financials, then you should aim toward using it more toward utility and consider it as means of transportation and not something for fun.
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Totally, I just had to wax poetic about cars for a moment :D
 
Teodora Saylor said:
I always get good responses here :) I hope someone will also share their thoughts on this random question of mine. I just want to know how does refinancing work on a car loan. Is it true that most people refinance to save money? I want to understand the possible outcomes of refinancing a car before I jump into it. Thanks in advance.
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Best of luck on the refinance. I don't know how it works since I always save up and pay cash for my cars. I'm not sure most people realize what the total cost of the car is after financing.
 
Plutonius said:
Best of luck on the refinance. I don't know how it works since I always save up and pay cash for my cars. I'm not sure most people realize what the total cost of the car is after financing.
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It of course depends on your interest rate. Mine was so low, financing was irrelevant. But a long time ago, I had a co-worker with a 19% apr car loan.
 
samiwas said:
It of course depends on your interest rate. Mine was so low, financing was irrelevant. But a long time ago, I had a co-worker with a 19% apr car loan.
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That's very true. Even though it doesn't make sense economically, I will pay cash even if the car has a very low rate because I hate monthly payments. I would rather buy the car outright and know it's mine (not the banks) :).
 
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Plutonius said:
That's very true. Even though it doesn't make sense economically, I will pay cash even if the car has a very low rate because I hate monthly payments. I would rather buy the car outright and know it's mine (not the banks) :).
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Well, I looked at it like this: I could either drop $29,000 at one time, and not have as much of a cushion, or I could pay it off over a year of larger payments.

And I am damn glad I took the second option, because less than a month after buying the car, we found out my wife was pregnant. A lot of money had to get poured into that. Soon after, the business I had been doing most of my work for pretty much folded, so I lost a lot of income. And then my son got diagnosed with autism, and we had a lot of expensive therapies to pay for.

Since I had made a few large payments, I had was well ahead, and had a cushion of savings. I can't imagine what would have happened if that cushion hadn't been there.
 
sometimes people refinance to lower their monthly payment if it helps in your situation. If you do just make sure that the interest rate you receive is lower than you are currently paying. Hope that helps
 
We just bought a pair of new cars, and almost immediately, we refinanced both of them with our bank.

Cut the interest rates to less than half of what the car dealer got us, and they're simpler to pay off now, too.

We wouldn't have bought the cars if (a) our old cars hadn't already been paid off long ago, and (b) if we weren't confident about selling our house for a sizable amount. So it's not like we're hurting, although we "put the car before the house"...
 
There's nothing wrong with refinancing a car in a couple different scenarios:

1) My wife and I bought our house two years ago, and had a joint loan on my car through Ford at the time. We refinanced the car loan into her name only (but both on title) with our credit union so that I could get approved for the mortgage loan on my own (but both on deed) through the same credit union. This allowed us to get a better rate as my wife has great credit, but limited credit history having only been in the US since 2011. While we've always got the top tier rates on car loans, a quarter point is huge on a mortgage. Note that it cost us zero to refinance the car, and that we did NOT extend the term - we refinanced for the remaining number of months that were left on the original loan.

2) Anyone who knows the ins and outs of car buying knows you virtually ALWAYS take the extra rebates over the promotional financing. This usually results in a crappier rate. My wife and I bought a new car last Monday, and took the extra $1500 in rebates and the VW Credit top tier rate of 3.99%. In three months, when the title settles, we will refinance it with my credit union for sub 2%. That way we get good financing and all the rebates. It's also nice to have everything in house with our credit union and not having any third parties involved for anything.

The only time I wouldn't refinance is if you're doing it for a longer term to lower the payment - then you probably can't really afford the car.
 
Shmoo said:
How do you pick up any girls with that old Civic of yours?
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In a longterm relationship now, but before that I just find girls don't care at all. Any girl that did care isn't a girl for me.
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Plutonius said:
Best of luck on the refinance. I don't know how it works since I always save up and pay cash for my cars. I'm not sure most people realize what the total cost of the car is after financing.
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Well, if you have good credit it's almost universally better to take the loan out for as long as you can. What's .9% compared to 7% on the market? Or having liquid cash for emergencies?
 
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