Rate reduction

[mickeystoysz16]

Anyone here looked into refinanicing their cars now that rates have dropped and if so who did you use?

I have a quote from my current lender to refinance the balance with the same length reducing my payment, but would like to shop around and get some recommendations before I submit the application with my current lender and maybe do some negotiation.

[Shadow]

Originally Posted by mickeystoysz16

Anyone here looked into refinanicing their cars now that rates have dropped and if so who did you use?

I have a quote from my current lender to refinance the balance with the same length reducing my payment, but would like to shop around and get some recommendations before I submit the application with my current lender and maybe do some negotiation.

Have you looked into the credit unions? Used to be you have to be a specific group to get into one. Nowdays, just about everybody fits

I've always used them and they've been great!!
Good rates, easy to work with, etc.

Be careful though. As you know, extending the terms will put you upside down quicker than slippin on a bananna peel!

[mickeystoysz16]

Great Idea. My current lender is USAA and you have to be associated with the military to join so it is like a CU. I am not sure what other CU I might be eligible for. The only one I can think of is Vystar. I am already approved and my payment will drop about $50 for the 04. I just want to shop around before I commit and sign the dotted line.

[Shadow]

Navy, Grow, Suncoast, Macdill (if they still have any branches left?), etc etc.....

You'll have a PM in a few...

[Shadow]

Originally Posted by mickeystoysz16

Great Idea. My current lender is USAA and you have to be associated with the military to join so it is like a CU. I am not sure what other CU I might be eligible for. The only one I can think of is Vystar. I am already approved and my payment will drop about $50 for the 04. I just want to shop around before I commit and sign the dotted line.

Before jumping into another "loan" that you're obligated to, consider these two options

1) Consider taking out a HELOC or second on the homestead or another piece of property you may own, and pay the car off.

You now OWN the car which makes it an ASSET vs a LIABILITY (because you are no longer upside down in it)!

The interest rate on the 2nd is tax deductible, usually a much lower percentage rate, and can be spread out over a longer period, usually 10-15-20 years.

This will bring your monthly payments down to damned near nothing.

For example, lets say you were paying:

$500.00 month now.

The "new" mortgage payment for 15 years may be $150.00.
Make the minimum + another $300.00 each month = $450.00 (still drops by the $50.00 you mentioned) plus the tax break, and you pay it off in a couple of years.

Instead of having another 2-4 year "loan" that's not tax deductible, with interest compounding, which places you that much further upside down in the car, you now pay the car off faster because you're paying more cash to principle, saving you a ton of $$$$ in interest and preserving the value of the car

If you run into a difficult financial situation, merely drop back to the minimum payments until you're over the hump, then return to the added principle payments

2) If you have a CD or money market account, consider "borrowing" the money you need from yourself.

Interest rates on this sort of "loan" through a credit union generally run about 1-2% higher than the MM or CD rate. Of course those change every 6 months to a year, but with todays economy, I wouldn't look for a major shift any time soon.

You're $$ is still there, just "frozen" and not drawing interest on the unpaid balance.
As you pay yourself back, it goes back into the MM account or is transferred over to another CD as you pay back enough, and begins to draw interest once again

Your payments are calculated on the amount over time, so you can to a degree set your repayment schedule to meet the monthly payments you're looking for! After all, you're borrowing your own money

God forbid, you were out of work and unable to make the payments, you can suspend the payments until you're back on your feet, or if necessary, default on the loan.

Unlike a standard "loan", this default wouldn't effect your credit rating (since you didn't borrow from the institution-you borrowed from yourself), you'd keep the car, but lose the unpaid balance of your "borrowed" money.

We've done this on 2 cars and it's worked out beautifully. Always paid it back, but saved along the way.

The interest rate is low, payments to meet MY feckin' needs, and the comfort in knowing that if I "HAD" to walk away from it, I could with no penalties, law suits or credit damage

Hope this helps a little?

Gordon

[chris308]

GTE cu is where i have my vette financed through, least for anothe 2 years

They have been really good to work with and have good rates as well.

[mickeystoysz16]

Originally Posted by Shadow

Before jumping into another "loan" that you're obligated to, consider these two options

1) Consider taking out a HELOC or second on the homestead or another piece of property you may own, and pay the car off.

You now OWN the car which makes it an ASSET vs a LIABILITY (because you are no longer upside down in it)!

The interest rate on the 2nd is tax deductible, usually a much lower percentage rate, and can be spread out over a longer period, usually 10-15-20 years.

This will bring your monthly payments down to damned near nothing.

For example, lets say you were paying:

$500.00 month now.

The "new" mortgage payment for 15 years may be $150.00.
Make the minimum + another $300.00 each month = $450.00 (still drops by the $50.00 you mentioned) plus the tax break, and you pay it off in a couple of years.

Instead of having another 2-4 year "loan" that's not tax deductible, with interest compounding, which places you that much further upside down in the car, you now pay the car off faster because you're paying more cash to principle, saving you a ton of $$$$ in interest and preserving the value of the car

If you run into a difficult financial situation, merely drop back to the minimum payments until you're over the hump, then return to the added principle payments

2) If you have a CD or money market account, consider "borrowing" the money you need from yourself.

Interest rates on this sort of "loan" through a credit union generally run about 1-2% higher than the MM or CD rate. Of course those change every 6 months to a year, but with todays economy, I wouldn't look for a major shift any time soon.

You're $$ is still there, just "frozen" and not drawing interest on the unpaid balance.
As you pay yourself back, it goes back into the MM account or is transferred over to another CD as you pay back enough, and begins to draw interest once again

Your payments are calculated on the amount over time, so you can to a degree set your repayment schedule to meet the monthly payments you're looking for! After all, you're borrowing your own money

God forbid, you were out of work and unable to make the payments, you can suspend the payments until you're back on your feet, or if necessary, default on the loan.

Unlike a standard "loan", this default wouldn't effect your credit rating (since you didn't borrow from the institution-you borrowed from yourself), you'd keep the car, but lose the unpaid balance of your "borrowed" money.

We've done this on 2 cars and it's worked out beautifully. Always paid it back, but saved along the way.

The interest rate is low, payments to meet MY feckin' needs, and the comfort in knowing that if I "HAD" to walk away from it, I could with no penalties, law suits or credit damage

Hope this helps a little?

Gordon

Great points I did not think of these especially the interest tax deduction, I am unclear on how you do a self loan with a CD or MM. Do you mean like a 401k loan or do you put the balance in an account and draw down the payments each month? I am not following you on that one, but would like to figure it out. I was hesitant to post finances here but since it involved the car I did and now I m glad. I never thought about these.

Although I am afraid to ask what Gordon's financial advisor fee is

[Shadow]

Originally Posted by mickeystoysz16

Great points I did not think of these especially the interest tax deduction, I am unclear on how you do a self loan with a CD or MM. Do you mean like a 401k loan or do you put the balance in an account and draw down the payments each month? I am not following you on that one, but would like to figure it out. I was hesitant to post finances here but since it involved the car I did and now I m glad. I never thought about these.

Although I am afraid to ask what Gordon's financial advisor fee is

Who the hell would possibly pay for my advise!

I sent you a pm with my phone number. Feel free to call if you like.

The loan is called a "Share loan" at the credit union.

What you're doing is guaranteeing the funds provided you by the credit union with the funds in your CD or money market account.

Your money stays in your account, but since the share account is at a % or 2 above what your maraket or CD is bearing, you're not making interest on that part of the account.

As you pay it back, you transfer those funds back into the money market and that part begins to draw interest again.

ie:
$2000.00 in a MM account
$1000.00 MM "Share draft" (loan)
----------------
$1000.00 continues to draw regular interest while the remaining $1000.00 does not.
-----------------
$500.00 payment on the share draft loan-trabsfer it back to the MM acct.
------------------
$1500.00 (actually a little less due to the % or 2 added interest charge) is available to now draw interest at the current MM rate.
------------------
$200.00 payment on the account
------------------
$1700.00 (as above due to interest calculation) now available to draw interest in your MM acct.

...and on and on....

You would only lose your money if you decided to default on the account. The CU would then take the unpaid portion of the loan from the "frozen" MM funds to make them whole and complete the loan.

You would never want to do this, but it's nice to know you had the option in a major financial bind!

Meanwhile:

1) You're getting a phenominal interest rate on your new "loan" (current rate is about 1.5% ona MM acct so your interest rate for the "loan" is going to be in the range of 3.5-4%)

2) You're still building your credit score.

3) You're no longer indebted on the "car loan" and as such you're no longer upside down in it.

4) You set the terms of the loan and the monthly payment.

5) No credit checks, 100% guarantee of the "loan" and it's done while you wait...

For once....YOU run the show and YOU call the shots!!

I'm not sure I'll ever buy another car with a conventional loan!