I have about $10,000 left in my new auto loan (6.5%) with Nissan. I've been making $467/mo. I found it very hard to continue paying that much per mo. I want to lower my payment by refinance it for another 5 years. Please advice, Thanks!
Your going to need to provide more detail in your post if you expect any kind of reliable advice on what move to make next. For instance, what is your credit situation, why do you feel your current payments are too high, what is the value of your car, etc. Then we can give you some input
How long have you been paying on the current car loan? If you rolled negative equity into the purchase, then have you learned anything from this experience? Now for the no so nice comments ^>), 'what the heck are you thinking? You want to refinance $10,000 for 5-years? In this scenario, more than likley by the time you finish paying off the loan in this case, the depreciation incurred on the vehicle will negate any cost savings over term of the loan. In other words, you will always be in a negative equiity situation (upside down) because you will always owe more than the car is worth in trade/resale! Lets look at the numbers: If you refinance at a 5.75% interest rate for 36 months, your monthly payment would be $303.09 per month. In this scenario, in the first year you would pay $493.00 in interest, your total payments for the year would be $3,637.05, and you would be paying $2888.89 on the principle of the loan! If you refinance at a 5.75% interest rate for 60 months, your monthly payment would be $192.17. But in this scenario, in the first year you would pay $528.64 in interest, your total payments for the year would be $2,306.01, but you would only be paying $1633.22 on the principle of the loan! If you still feel the second scenario looks better simply because you are required to lay out less cash each month, then it is time for you to sit down and write yourself a budget! That may be harsh, but the reality is you already have a pretty good monthly payment with a reasonably good interest rate. Does your lien holder offer electronic payment options? If so, how about setting up a savings account for this purpose. Divide your monthly car note in 1/2 and have this amount direct deposited into the savings account each pay period (for bi-weekly pay). Then simply have the lien holder/bank/finance company automatically draft the payment each month. I began using this method in the military and have used it ever since becuase it is much easier to deal with major financial commitments in this manner. **Warning - mindless rant to follow: I know your current payment may seem sky high compared to people being offered 0 down/0%/0 payments for 1 year, but for the most part, those people are simply not reading the fine print. Sure that type of loan offers the ability to not have a car payment for a year, it also means that you are not paying anything on the balance of the loan! So that means that the 0/0/0 deal for 60 months, is simply a slick way of selling someone a car with 48-month financing that lasts 60-months. So even though we have no car payments for a year, the loan balance does not decrease, but the vehicle still continues to depreciate - this sound like a way to end up with some real serious negative equity! Forgive me for saying so but this is not the kind of math that people need to be trying - ever!
