Refinancing our 20.99% auto loans... HELP!

[HopeFaith]

Hi There!

My Husband and I both included our auto loans in our CH7, (we turned the cars in because we were knee-deep in negative equity and the payments were unaffordable). So, post-341 we went to a commercial dealership and reluctantly bought 2 cars. We each took a rate of 20.99% (EEEK)! The loan amounts are $14k, 6 year term, 350/mo payment through Zions Bank.

We were told we could easily refinance these at 6 months (go figure). We have received pre-approvals at 16-18% through Farragut Financial and some other unknown bank. We don't want to make the same mistake we made in the first place and settle on another high interest rate, but I can't stomach another month of these ridiculous payments.

Anyone have any advice or recommendations? We got the loans in Oct 2007, and discharged in January 2008. Should we wait until we have 12-months of on-time payments, or 12-months post-discharge? Anyone recommend a bank?

[MomIcantFindmy]

Check out some of the credit unions others have used in the forum. I can't remember the name but I believe it is in Rebuilding Credit.

[Flamingo]

I love how you were told you can easily refinance in six months...same thing was told to those who took out predatory mortgages (Oh, you can refinance easily before the rate rises in two years!)...right! Try Capital One.

[want_a_house]

HopeFaith,
In 2004, I bought a 2004 Chevy Blazer...in less than two years, it was ready to blow up, and the warranty had already expired by a couple thousand miles. Well, I knew I had to trade it in, so I purchased a 2006 Focus. I was in the red because I still owed 7 thousand plus on the Blazer after the trade in. I financed almost 22000 for a $13000 vehicle. My interest rate is 18.9% for six years (506.00!!!! per month payment). The dealership assured me that if I joined a credit union that I could get a lower interest rate. Well, that wasn't the case. I called my CU to inquire so they wouldn't pull my reports if I didn't have a chance to refinance. After explaining my situation and telling them I had never been late on my auto loans, they said that the car did not blue book for the amount I still owed. The lady said, "If you can come up with 6,000 dollars to pay on the car, then we might be able to help."
After hearing that, I turned off the phone. Dealerships will tell you anything to buy a car!

[loudrumble]

Go with HSBC auto. I took out a loan in May of 2008 with roadloans @ 21.49%
Now, just this month i figured i would try for hsbc to refi, and I got approved at 17%. A lot better than 21.49%

[BKParalegal]

Two things to consider, before you refi the loan with another bank and accrue additional charges, talk to your bank and let them know that you are going to refi the loan with another bank at the lower interest. If you payment record is clean with them, they may adjust the rate lower for you, so you don't have to go thru the bother of refinancing. Also, if you can afford it, paying an additional $50 to $100 a month on your car payment can effectively negate the high interest rate, because you will pay down on the principal faster.

Good Luck

[HHM]

A couple issues with auto refi...

1. Usually it does not make sense to do so even if you have a high interest rate, if you really run the numbers, an auto refi costs more money than simply paying out the existing loan.

2. The only way a refi "may" save you money is if the term of the note does not exceed the amount of time left on the current note, and ideally, would be a shorter time frame.

As BK Paralegal points, assuming there is no prepayment penalty, you are probably better of simply over-paying your monthly payment and designating that amount to principle than actually doing a refi.