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Sunday, March 9, 2008

Car Update

As you all know, I decided to trade-in my vehicle for a less expensive one. I currently pay $532 a month for my 2006 Honda CR-V. Ridiculous I know.

I called my credit union on Monday and applied for a $10K loan over the phone. The loan officer called back in 2 hours and said that I had been approved. She put me in touch with a company the credit union worked with that would be able to get me a car at a wholesale price. The guy took my info and looked up the trade-in value of my car. He called me back and said that the trade-in value on my car was $13,500. Mind you, I owe a lil over $19K. I would basically be almost $6000 upside down on a loan for a used 2001-2003 car.

Can we say UH NO!!!

Dude advised me NOT to go this route and to just keep paying down my car for a lil while longer. He kept it real and I appreciated that. I am so glad that I decided to talk with his company first instead of going to a dealership with my freshly approved loan and walking away just plain ignorant of what mess I just got myself into.

So I called the loan officer at my credit union and explained to her the conclusion that he and I came to. She suggested that I might want to look into refinancing my car with them. Based on my numbers my interest rate would be 6.5% (down from 9.8% with my current loan) and my monthly payment wold be $392. That is a $140 savings from what I pay now.

Can we say UH HELL YEAH!!!

So I applied to get my loan refinanced with my credit union and got approved. I contacted my current car loan folks Saturday morning and they sent over the payoff letter. Everything should be final by Tuesday morning the latest.

You would think that the good news ended there but it didn't. Because I am refinancing my loan, I did not have to pay my car payment this month. (No I am not late. They are paying the loan off within the grace period.) So now I have $550 free this month to do as I please. Of course that is going towards my credit card debt.

And WAIT!! It gets better.

My loan officer said that my first payment would be due until 60 days after my refinance was complete. 60 DAYS!!! That means that I will have even more money to pay down my credit card debt next month also.

Things worked out pretty well. I got to keep my car (that I absolutely adore) and still managed to lower my monthly payment significantly. Thanks to all who gave me advice on this.

I'll hit you guys with an update once everything gets finalized. I am working on my March 08 budget. I'll post that later or in the morning.

Ciao

10 comments:

CT Mom said...

DD - that's awesome! Isn't it amazing how things work out ... I'm happy for you. Btw, I have a 2006 Honda CRV and love it, too

SingleGuyMoney said...

Wow - that is awesome Dimples. That worked out even better. Congratulations on getting to keep the car and paying out less in car payments each month.

savvy said...

That's great. You're not extending the term of your loan though, are you? If so, be careful that the longer term doesn't negate the savings of the lower interest rate. Also, have you considered still paying $532/mo to the loan to get it paid off earlier?

Fabulous Financials said...

I was thinking the same thing as savvy. If you extended the term (i.e. only had 3 yrs left but refinanced for 5 yrs again), paying less per month will only INCREASE your negative equity.

At any rate, CONGRATS on the lower rate and freeing up some cash flow. Sounds like your credit has improved significantly since the first finance.

Dimples said...

@ CT Mom

Thanks! I know you do. I read a post you had on it. Ain't it wonderful.

@ singleguy

Thanks!

@ Savvy & Single Ma

I only extended my loan out by 3 months. Definitely worth it to me for the savings. By the way things are working out for me, I will be to pay off the loan WAYYY before the 48 months.

Thanks for looking out tho!

Sistah Ant said...

first, i'm happy for you. i drive an '03 CRV that i bought two years ago, and i love my car! i've thought about refinancing, but i plan on paying it off aggressively starting late this year, anyway.

Jessi said...

That is so awesome! Great job! Fantabulous!

Bayou said...

Random Question, if you can answer:
do credit unions give better rates on loans for refinancing?

I'm thinking about refinancing my car. I currently have a bank account with a major bank, but I don't know if they will give me a good deal or not.

Any suggestions?

Dimples said...

@ Sistah Ant

Thanks girl. I love my CRV.

@ Jesse

Thank ya chica!

@ Bayou

In my experience I would have to say yes. I had my car loan with Statefarm before I refinanced and went with my credit union. Everyone uses tiers based on your credit score when issuing you a rate. With Statefarm, I would need a 700 in order to qualify for a interest rate of 7%. While with my credit union, my 640 credit score earned me a 6.5% rate. And when I hit 700 I can lower my rate to 4%. That is about a 3% difference when you look at it. So I would say go and talk to a credit union and see what they can offer you and compare.

Hope that helps.

Bayou said...

Thanks for the help! I really appreciate it. :)