I have (2) car loans. THe first is a year old, with all payments on time. My credit with the finance company is good, and they said they will be there for me in the future. I still owe $3,000 ... Problem: 25% interest rate. The other car I have with a different finance company. I have only paid 4 payments so far (all on time). This rate is 17%. Problem: I still owe $11,000. Should I A: Sell the new car and buy a cheaper car through the high interest rate company, or B: Try to get the lower interest rate company to refinance the older loan. I would kinda like to sell the new car and buy a used car for around $6,000 (thus saving 5K), but I am stumped. I don't like the 25% rate. Or do I just C: Keep it the way it is and learn from my mistake. I should add that I don't want to do ANYTHING that may hurt my credit. That is PRIORITY ONE. I will continue with the 25% if it means keeping my credit from getting another negative mark. Thanks Deputy
Also, I know that obviously I would save a ton of cash by selling the new car and getting a cheaper one. The problem is not that I cant afford the new car, it is that I would rather owe less money. But again, I dont want to hurt my credit more. how bad would it look if I got rid of the new car this early, and got into another car oweing less? Deputy
wouldn't look bad at all. As a matter of fact it will look good since you are lowering your monthly obligations. If you are upside down in your loan (Payoff is greater than the value of the car) Then you'll need to pay the cash difference yourself.
Thanks Sam. I am not sure if I am upsidedown or not, but if so, it is not by much. I just want my credit to lok better (as do we all), and am worried about making a mistake. Deputy
I probably sound like a broken record on this, but you'll probably have better luck with a dealer. Take the new car in and see what they can do for you on a trade. If you are a little upside down, they can bury the negative equity in your next (hopefully cheaper) car. If you can't get a rate below 15%, walk away. The dealer will probably have three or four banks to choose from to finance you, and he will probably try to mark the rate up. It's called dealer rate participation. Bank says we'll do it at 13%, he tells you its 16% and he gets to keep the difference. So if they tell you 15%, say you can't do it for more than 13%. Plan on at least a 2% markup to negotiate from if you are subprime.
Wolverine, That's very good advice! The walk away method works! I was offered 18% and walked away. Then I was offered 16% and walked away again. I caved in at 14% because I knew I had horrible credit. Deputy if you can afford to, pay off the $3000 balance on the 25% interest. That will save some money, enhance your credit, and gives you a paid-off car to sell.
yah i had to walk 3 times to get my car at a price i wanted... those car salesmen are leeches these days.
