Refinance Question

[347Mike]

Alright, my brain is mush right now. It's been a long day to say the least.

I have been wanting to refinance my car to cut some of the interest back but my brain isn't computing like it should right now and I need the help of my fellow community.

I will try and explain this the best I can so here it goes:

Initial Loan Start:
Loan Start: 1/08
Loan Amount: $19,164.38
Interest rate: 8% +/- (not sure)
Loan Term: 72 months - current pay off is 12/17/2013

Refinance Status
Loan Start: Next month
Refinance Amount: $10,918.28
Interest Rate: 3.7%
Loan Term: 36 months

Now, where my brain is not working is here:

My payments would be roughly the same amount and the loan at this current time will be 3 years for both current and refinance. Will I save any money by refinancing? The fact the loan term is the same and monthly payment is the same my brain is saying no. However, my approximate interest per payment right now is roughly $80.00, and with refinance it would start off around $35 and with this my brain tells me yes, you will save.

So, opinions? Hopefully this makes sense because I don't even know what I just typed..

This will probably make sense tomorrow morning but I cannot think straight to save my life right now and I have been up since 5.

Any help would be appreciated!

[Skidmark]

You will save 25 a month! 900 dollars...

[Vertnut]

You're also paying off more than half the balance in half the term. Most of the difference is in what you paid in the first 1 or 2 years of that 72 month note. A 6yr. car note...damn!

[Skidmark]

Interest and principle don't matter really.

He currently owes 3 years on his old loan and he would own 3 years on his new loan.

old loan = 344 a month
new loan = 320 a month

[347Mike]

You're also paying off more than half the balance in half the term.

Right but from right now it is exactly 3 years (36 mos) to when the loan is paid off, just like the refinance (36mos).

[347Mike]

You're also paying off more than half the balance in half the term. Most of the difference is in what you paid in the first 1 or 2 years of that 72 month note. A 6yr. car note...damn!

It's what I had to do to get credit and not having patience. My first car note was for 4 years, paid 8k down with 7k remaining. I paid for 1 whole hear and still owed 6,000 +. My interest rate was 16% or something.

I have learned a lot since then and wanted what I wanted then. I have superb credit and want to get out of the interest crap. Paying off the 10k out right is not an option. I like having a cushion regardless of what the long 24-36month savings is. It helps me sleep at night.

At any rate, is there a savings in what I posted above besides the 900 Brien mentioned!?


Additionally, will my insurance go down at all? Since my original financed amount was 19k and refinancing at 10,XXX will that lower my insurance since my loan is for less = less to insure?

[Vertnut]

Right but from right now it is exactly 3 years (36 mos) to when the loan is paid off, just like the refinance (36mos).

Hahaha! You're right...I think he won't save but $25 or so, because it's such a short term note.

[Vertnut]

It's what I had to do to get credit and not having patience. My first car note was for 4 years, paid 8k down with 7k remaining. I paid for 1 whole hear and still owed 6,000 +. My interest rate was 16% or something.

I have learned a lot since then and wanted what I wanted then. I have superb credit and want to get out of the interest crap. Paying off the 10k out right is not an option. I like having a cushion regardless of what the long 24-36month savings is. It helps me sleep at night.

At any rate, is there a savings in what I posted above!?

I wasn't chastising you. My first new car loan was for 36 months, but new cars were $8000. My last car note was 60 months, and I didn't think we'd EVER pay that bitch off!

[SVT Lurch]

Additionally, will my insurance go down at all? Since my original financed amount was 19k and refinancing at 10,XXX will that lower my insurance since my loan is for less = less to insure?

Insured amount is based on value of car - not loan, shouldn't make a difference.

You will save 25 a month! 900 dollars...

I show 343 vs 328 or $15/month less. Savings of $540 less the cost to refinance. Although if it doesn't start until 2/1 your 36th payment will be 1/2014 which adds 328 to your payments so it's actually 540 - 328 = 212 less cost of refinance.

What's the cost to refinance the car loan?

[347Mike]

Hahaha! You're right...I think he won't save but $25 or so, because it's such a short term note.

What about insurance wise (previous post)? That could be an option.

[347Mike]

Insured amount is based on value of car - not loan, shouldn't make a difference.


I show 343 vs 328 or $15/month less. Savings of $540 less the cost to refinance.

What's the cost to refinance the car loan?

Didn't even think of that at.


I don't know.

[347Mike]

Thanks for your help guys. I need to get the hell out of here before my face slams against my keyboard. Ill check in tomorrow.

[SVT Lurch]

Didn't even think of that at.


I don't know.

Read my edit, then find out, that will determine if it's worth it.

[slow99]

SVT Lurch is on it...don't forget the NPV savings of pushing a payment out a month!!

[AdamLX]

$20ish per month, $700ish in interest saved over 36 months vs. the current note. Instead of skipping that first payment, see if you can make it and drop the principle balance.

Deduct cost of the loan from total interest saved and there's your answer.