Internet's first get-out-of-debt community - 134,000 members

Posted: Wed Nov 14, 2007 9:59 am Subject: how can i refinance my

how can i refinance my car with bad credit!!! i just got the car in feb my payments are 470 a month and for each day i'm late its an extra $11 what can i do

jerry nickles · Posted: Sun Nov 25, 2007 7:19 pm Subject: refinance my car

I pay 443.00 month on a 2005 chevy cobalt, ls with sport package, 34,000 miles body in perfiect shape and new tires. Would like to refinance at a lower interest rate.

Posted: Sun Nov 25, 2007 9:51 pm Subject:

Good luck. When we tried to refinance our van we had no luck because we were upside down on it. If you strike gold come back and let me know what company you used.

Posted: Mon Nov 26, 2007 4:18 am Subject:

Latoya, what kind of loan is that? Is it through a bank or is it through some kind of plan the dealership offers? When getting your car re-financed if the loan amount is a certain percentage over the value of the car you will not be able to get it re-financed.

Posted: Mon Nov 26, 2007 6:31 am Subject:

Unlike a house, cars are constantly depreciating in value. You've probably heard that as soon as you drive off the car lot, it loses about 1/3rd of its value. That is more true than not (at least with respect to new cars).

Lenders typically don't like to refinance vehicles, for two reasons:

1) A potential lender needs to know that the value of that car will always be more than you owe them at any given point in time. When they grant a loan, they will not go over-book; and to keep a safe buffer they will probably go under book by $2-3K. (Also keep in mind, when they value your vehicle they are looking at black book- not blue book).
Because your vehicle has been depreciating over the last 9 months, and most of your payments have been going toward interest in the first 1/3rd of your current loan, your car is losing value more quickly than you are paying for it. To a potential lender, you do not have enough equity in that car for them to consider it as sufficient collateral.

2) Many lenders/banks don't want to deal with used cars, mainly for the above reasons. Secondary lenders who deal in the used car market are harder to come by. Also, given the fact you stated you have poor credit, that is also a deterrant. So your goal is to find a sub-prime lender who deals with used cars ... there aren't very many and you will have to dig hard and deep to find one. Beware, most lenders who will take on high-risk customers, do so because they charge a high rate.

If you can clean up your credit a little bit, and get rid of your delinquencies, then you may be able to get traditional financing instead of subprime. Traditional will be less %, which equals lower payments.

If you can come up with a "down payment", say put $5-6K into your current loan to get its' balance down, then you might have a better chance refinancing it.

Also it usually looks better if you can have at least a year of on-time payments with your current loan. To try refinancing so quickly after you took out this loan tells a new lender that you might not be able to handle these payment -- and then they wonder why you signed the contract if you couldn't afford the payments? In their eyes it's a 'robbing peter to pay paul' situation, and they don't want to be peter.

Posted: Mon Nov 26, 2007 7:21 am Subject:

Good points debtcruncher, especially about used car loans. Latoya's loan sounds like an in-house loan since I haven't heard of traditional loans charging you extra for each day you are late on payments.

Just for clarification on the car refinancing though, banks will refinance your loan for more than the car is worth. We just refinanced our car loan and the bank informed us in the beginning that they do not refinance if the loan would be 115% over the book value of the car. We were under that because we always pay more than the minimum amount due each month and we originally put $10,000 as a down payment. Each bank is different, but most will refinance over what the car is worth, but not by much.

thanks ramj70 · Posted: Fri Dec 07, 2007 1:02 am Subject:

thanks ramj70 for giving others hope and proving that you can still strike gold !!!!! Probably depends on your payment history credit report etc! (Sometimes when people are upside down on loans it also means that they are bad pay or no pay)

*Name:
*Email:
*Phone:
*Zip:
*Debt

	* denotes required field

Internet's first get-out-of-debt community - 134,000 members

how can i refinance my

Members Area

Free Debt Counseling

Ask the community

Featured Discussions

Featured Articles

Question of the Month

Also See

Recent Forum Discussions

Recent Blog Post