Author Topic: Is refi used auto loan worth it?  (Read 2849 times)

mindaugas

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Is refi used auto loan worth it?
« on: November 06, 2012, 08:04:48 AM »
Wondering if any other mustachians have done this and what your experience is? I'm looking at refi the one below.
Balance $10,379
8.5% interest
$300 a month payments
With a credit union, about 2 years left. Is in wife's name, credit over 720. My credit is 700.

I checked bankrate and there are a few options. One at 3.24%, the others are below 3%. So some significant interest savings. However I would be adding a year onto the loan (36 month terms), but I plan on paying it off within a year regardless. If I can knock some interest off mayhaps I can pay off faster me thinks?
« Last Edit: November 06, 2012, 09:42:15 AM by mindaugas »

sibamor

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Re: Is refi used auto loan worth it?
« Reply #1 on: November 06, 2012, 09:09:24 AM »
Amortization Tables:
Line: Month: Payment: Interest: Principle: Balance
Current: 8.5% over next 2 years
Loan   12/1/2012    -     -     -     $10,379.00
1   1/1/2013   300.00   73.52   226.48   10,152.52
2   2/1/2013   300.00   71.91   228.09   9,924.43
3   3/1/2013   300.00   70.30   229.70   9,694.73
4   4/1/2013   300.00   68.67   231.33   9,463.40
5   5/1/2013   300.00   67.03   232.97   9,230.43
6   6/1/2013   300.00   65.38   234.62   8,995.82
7   7/1/2013   300.00   63.72   236.28   8,759.54
8   8/1/2013   300.00   62.05   237.95   8,521.58
9   9/1/2013   300.00   60.36   239.64   8,281.94
10   10/1/2013   300.00   58.66   241.34   8,040.61
11   11/1/2013   300.00   56.95   243.05   7,797.56
12   12/1/2013   300.00   55.23   244.77   7,552.79
13   1/1/2014   200.00   53.50   146.50   7,406.29
14   2/1/2014   300.00   52.46   247.54   7,158.75
15   3/1/2014   300.00   50.71   249.29   6,909.46
16   4/1/2014   300.00   48.94   251.06   6,658.40
17   5/1/2014   300.00   47.16   252.84   6,405.57
18   6/1/2014   300.00   45.37   254.63   6,150.94
19   7/1/2014   300.00   43.57   256.43   5,894.51
20   8/1/2014   300.00   41.75   258.25   5,636.26
21   9/1/2014   300.00   39.92   260.08   5,376.19
22   10/1/2014   300.00   38.08   261.92   5,114.27
23   11/1/2014   300.00   36.23   263.77   4,850.49
24   12/1/2014   300.00   34.36   265.64   4,584.85
Interest Payment ~$1305

At: 3.24%
Loan   12/1/2012    -     -     -     $10,379.00
1   1/1/2013   300.00   28.02   271.98   10,107.02
2   2/1/2013   300.00   27.29   272.71   9,834.31
3   3/1/2013   300.00   26.55   273.45   9,560.86
4   4/1/2013   300.00   25.81   274.19   9,286.68
5   5/1/2013   300.00   25.07   274.93   9,011.75
6   6/1/2013   300.00   24.33   275.67   8,736.09
7   7/1/2013   300.00   23.59   276.41   8,459.67
8   8/1/2013   300.00   22.84   277.16   8,182.51
9   9/1/2013   300.00   22.09   277.91   7,904.61
10   10/1/2013   300.00   21.34   278.66   7,625.95
11   11/1/2013   300.00   20.59   279.41   7,346.54
12   12/1/2013   300.00   19.84   280.16   7,066.37
13   1/1/2014   200.00   19.08   180.92   6,885.45
14   2/1/2014   300.00   18.59   281.41   6,604.04
15   3/1/2014   300.00   17.83   282.17   6,321.88
16   4/1/2014   300.00   17.07   282.93   6,038.94
17   5/1/2014   300.00   16.31   283.69   5,755.25
18   6/1/2014   300.00   15.54   284.46   5,470.79
19   7/1/2014   300.00   14.77   285.23   5,185.56
20   8/1/2014   300.00   14.00   286.00   4,899.56
21   9/1/2014   300.00   13.23   286.77   4,612.79
22   10/1/2014   300.00   12.45   287.55   4,325.24
23   11/1/2014   300.00   11.68   288.32   4,036.92
24   12/1/2014   300.00   10.90   289.10   3,747.82
25   1/1/2015   300.00   10.12   289.88   3,457.94
26   2/1/2015   300.00   9.34   290.66   3,167.28
27   3/1/2015   300.00   8.55   291.45   2,875.83
28   4/1/2015   300.00   7.76   292.24   2,583.59
29   5/1/2015   300.00   6.98   293.02   2,290.57
30   6/1/2015   300.00   6.18   293.82   1,996.75
31   7/1/2015   300.00   5.39   294.61   1,702.15
32   8/1/2015   300.00   4.60   295.40   1,406.74
33   9/1/2015   300.00   3.80   296.20   1,110.54
34   10/1/2015   300.00   3.00   297.00   813.54
35   11/1/2015   300.00   2.20   297.80   515.73
36   12/1/2015   300.00   1.39   298.61   217.13
Interest payment: ~$538

At current rate with no added payments in the next 2 years you will spend ~1305 in interest, versus 3 years of ~538 in interest.  Already this is a greater than 760 savings.

If you were to look at Interest paid at end of 2013: 8.5% is $773, 3.24% $287. *assuming no additional payments, payment amount the same.

You will be avoided ~500-700 in interest payments that you will then contribute back to principle.  You are cutting off a month or two of regular payments and begin contributed those car payment funds elsewhere.

Worth it? I vote yes.

Mactrader

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Re: Is refi used auto loan worth it?
« Reply #2 on: November 06, 2012, 09:19:43 AM »
If it's zero cost, then there is no reason not to do it.

Another Reader

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Re: Is refi used auto loan worth it?
« Reply #3 on: November 06, 2012, 09:23:56 AM »
Why was the original credit union loan interest rate so high? 

If you have excellent credit, lots of credit unions are below 3 percent on auto refinances.  Mine is at 2.5 percent for 36 months. 

mindaugas

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Re: Is refi used auto loan worth it?
« Reply #4 on: November 06, 2012, 09:41:00 AM »
Thanks, those tables certainly make it more obvious. The loan is under my wife's name, her credit is over 720 but it may have been lower back then. I think she may have been a 680 when we bought that car. My credit is at 700. Not sure who's name we would use, the house is under her name so she may be tapped out on DTI. 

TomTX

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Re: Is refi used auto loan worth it?
« Reply #5 on: November 06, 2012, 03:23:12 PM »
If someone will give you the lower rate - take it!

Just make sure there is no prepayment penalty, and throw money at the debt until it's gone.

Jack

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Re: Is refi used auto loan worth it?
« Reply #6 on: November 06, 2012, 04:49:39 PM »
The other obvious choice, of course, is to sell the car (since having a loan in the first place implies you can't afford it.)