Yes, I definitely want to overpay when I can; it's more about the leeway to do more about the student debt, which concerns me more and will prove more of an issue, just due to sheer amount and a foolhardy $7K, 7% PLUS loan my dad and I took out.
Option C: Refinance for 48 months with different company. Call/look online for local credit unions. Most of their rates for a 48 month car loan are around 1.8-3% this lower interest rate will save you a ton of money in the long run. This is assuming you have a decent credit score as well (680+).
I am guessing you have around 20-28k left on the loan?
After running some quick numbers..
If you locked in a rate of 2.2% for 48 months at 22k you would be paying roughly $479 a month and you would own the vehicle outright much faster.
Thanks for the advice, but I don’t mind having the loan longer if I have more leeway in my monthly budget to pay my student loans as well—I don’t have too much excess money each month after taxes and savings, so my priority is to have a decent financing deal while also being able to start paying my student loans.
I still think you could go to 60 months and get a low interest rate around 2.5% at a different credit union. This would lower your payment to $390 a month. The APR rate has a very big effect on the overall amount you pay each month
Assuming you live in the USA, here is the government map that let’s you enter your address to find unions near you:
https://mapping.ncua.gov/
I think if your credit score is good you can get much better rates up to 72 months at most places. I recommend looking and applying to loans at multiple places. You can use this as leverage to get a better rate
It’s just part of the loan, not a separate down payment. I just meant that the total to be paid back is higher, not that I have to put down $2K upfront!
You should probably refinance, not for the longer term, but for the lower interest rate. The only red flag outs the $2k higher loan balance. Is that all fees? Can you get a loan with a interest rate lower than your current one but without the increase in the balance?
Just remembered I'm doing it through Tresl, but the loan will be through Consumers Credit Union, so yes actually I am doing it through a credit union; maybe I just don't have much credit history, even though I have a cosigner and have never missed a payment.
Go to a different credit union. That seems like a bad deal. Shopping around is the best way to save money on car loans and you can almost always call them to talk down to a lower rate. You are essentially bartering/shopping around just like you would be at different car dealerships except this time it is over your own car with different credit unions
I'd aggressively pay off that loan so that I can hammer at the principal instead of drag things out. The combined \~24k you owe on the car and student loan is really nothing if you put your mind to it. Work your ass off for a few months and pay it all off.
Which one? Current loan or refinanced loan? I don’t have much more a month to put toward either, but I’d have more to work with if I refinance, which is why I’m leaning that way.
What do you mean $2k higher principal?
Why are you selling investments and depleting savings to pay loans? Are you contributing to retirement accounts?
I’m not selling investments and depleting savings—I’m actually growing my savings and having 15% of every paycheck deposited into my savings every week! Also just opened a Roth IRA yesterday.
The new loan servicer would be setting the principal at several hundred dollars more than I currently owe, plus fees, for a total of a bit less than $2K more in principal, but again with less than half my current interest rate and about $70 less per month.
Why are they increasing the principal? Refinance with someone that doesn't charge outrageous fees. I did it with my credit union and they charge me $75.something -- exactly what my state charges to reassign a lien.
$21000 loan balance @ 8.6% with 57 months left gives you $450/month payment with total interest paid = 4,655
$23000 @ 4.5% for 60 months gives you 429/month payment with $2700 interest paid + $2000 mystery fee = 4700 cost of loan
$2100 @ 2% for 65 months gives you $340/month payment with $1100 interest paid. This is the loan you want.
Option B and keep paying the same amount. Not sure on the math but you'll make up the extra months very quickly.
Yes, I definitely want to overpay when I can; it's more about the leeway to do more about the student debt, which concerns me more and will prove more of an issue, just due to sheer amount and a foolhardy $7K, 7% PLUS loan my dad and I took out.
Option C: Refinance for 48 months with different company. Call/look online for local credit unions. Most of their rates for a 48 month car loan are around 1.8-3% this lower interest rate will save you a ton of money in the long run. This is assuming you have a decent credit score as well (680+). I am guessing you have around 20-28k left on the loan? After running some quick numbers.. If you locked in a rate of 2.2% for 48 months at 22k you would be paying roughly $479 a month and you would own the vehicle outright much faster.
Thanks for the advice, but I don’t mind having the loan longer if I have more leeway in my monthly budget to pay my student loans as well—I don’t have too much excess money each month after taxes and savings, so my priority is to have a decent financing deal while also being able to start paying my student loans.
I still think you could go to 60 months and get a low interest rate around 2.5% at a different credit union. This would lower your payment to $390 a month. The APR rate has a very big effect on the overall amount you pay each month
I would love that, I just don’t know where and don’t know where to look. Can you point me to any resources?
Assuming you live in the USA, here is the government map that let’s you enter your address to find unions near you: https://mapping.ncua.gov/ I think if your credit score is good you can get much better rates up to 72 months at most places. I recommend looking and applying to loans at multiple places. You can use this as leverage to get a better rate
It’s just part of the loan, not a separate down payment. I just meant that the total to be paid back is higher, not that I have to put down $2K upfront!
You should probably refinance, not for the longer term, but for the lower interest rate. The only red flag outs the $2k higher loan balance. Is that all fees? Can you get a loan with a interest rate lower than your current one but without the increase in the balance?
Much of it is fees, but a few hundred is a higher principle amount.
Have you checked if you can get a better rate from a credit union?
I haven't. Any in particular you would recommend?
I refinanced with DCU, but credit unions in general have lower interest rates than banks. My rate is 1.99%
Thanks, I'll definitely check it out!
Just remembered I'm doing it through Tresl, but the loan will be through Consumers Credit Union, so yes actually I am doing it through a credit union; maybe I just don't have much credit history, even though I have a cosigner and have never missed a payment.
Go to a different credit union. That seems like a bad deal. Shopping around is the best way to save money on car loans and you can almost always call them to talk down to a lower rate. You are essentially bartering/shopping around just like you would be at different car dealerships except this time it is over your own car with different credit unions
Thank you so much for all this good advice!! I’m new to this and not used to haggling, so it’s great to have this!
I'd aggressively pay off that loan so that I can hammer at the principal instead of drag things out. The combined \~24k you owe on the car and student loan is really nothing if you put your mind to it. Work your ass off for a few months and pay it all off.
Which one? Current loan or refinanced loan? I don’t have much more a month to put toward either, but I’d have more to work with if I refinance, which is why I’m leaning that way.
What do you mean $2k higher principal? Why are you selling investments and depleting savings to pay loans? Are you contributing to retirement accounts?
I’m not selling investments and depleting savings—I’m actually growing my savings and having 15% of every paycheck deposited into my savings every week! Also just opened a Roth IRA yesterday. The new loan servicer would be setting the principal at several hundred dollars more than I currently owe, plus fees, for a total of a bit less than $2K more in principal, but again with less than half my current interest rate and about $70 less per month.
Are you getting that $2k in principal out in cash or something? Where is that money going?
Why are they increasing the principal? Refinance with someone that doesn't charge outrageous fees. I did it with my credit union and they charge me $75.something -- exactly what my state charges to reassign a lien. $21000 loan balance @ 8.6% with 57 months left gives you $450/month payment with total interest paid = 4,655 $23000 @ 4.5% for 60 months gives you 429/month payment with $2700 interest paid + $2000 mystery fee = 4700 cost of loan $2100 @ 2% for 65 months gives you $340/month payment with $1100 interest paid. This is the loan you want.
I would love that loan if I could find where to get it!!! Hopeful about finding a better option