Alan Beaulieu
Active Member
I have the option of refinancing my truck to lower my montly rate and wouldnt be a gain to my interest rate? Will this hurt my credit score?
is refinancing a good idea
- Thread starter Alan Beaulieu
- Start date
Help Support Ford SportTrac Forum:
- Joined
- Sep 21, 2003
- Messages
- 22,366
- Reaction score
- 752
- Location
- Long Island, NY
- What engine do you have?
- V8 engine
- What year is your Sport Trac?
- 2010
- What Generation is your Sport Trac?
- 2n Gen Owner
Will not hurt credit as long as you don t make the length of the loan longer to lower the payments..
Todd Z
Todd Z
Brain fart.
Last edited by a moderator:
Aaron Yarbough
Well-Known Member
Rodger, he's talking about refinancing his truck not the house.......
troy malone
Active Member
terrible idea... you pay most of the interest in the first years of a loan.. you would be paying more in the long run...
troy
troy
Mark Santini
Active Member
Alan, I agree with Troy. Even though you are getting a lower payment, you are really paying more in the long run, due to the added interest payments. Just pay it off under your current terms,,,,,,,and forget it,,,,,,,,just my two cents worth again,,,,,,,,,,,Mark
Refinancing a depreciating assett (car, mobile home, boat, etc.) is never a good idea. You're dumping additional funds into something that will never return them.
Now, if you NEED to lower your payments to avoid missing payments, racking up credit card debt (which has a much higher interest rate, generally), losing your home or something else it may be an option. But if you're just doing it to free up some cash, you're better off leaving your Trac payments where they are and finding the cash elsewhere.
Now, if you NEED to lower your payments to avoid missing payments, racking up credit card debt (which has a much higher interest rate, generally), losing your home or something else it may be an option. But if you're just doing it to free up some cash, you're better off leaving your Trac payments where they are and finding the cash elsewhere.
Alan Beaulieu
Active Member
thank you everyone. It was one of those things that "sounded good" so i became a little weary about it. Now i know the scoop. Thanks again
Dan Long
Well-Known Member
One option, although it requires a very disciplined person and depends on how much you still owe, is to move it to a credit card as a balance transfer. If you have good credit, you can often find 0% balance transfer offers with no fees, they don't care what account they're transferring the balance from. It will lower your "required" monthly payment and get the title into your hands rather than your banks. The key is you must be disciplined enough to continue making large payments, DO NOT be late on the payment, and DO NOT use that card for anything else until its paid off. As most 0% offers are only good for a limited time, you will need to pay it off in that amount of time, or transfer to another 0% offer. This method has its downsides and potential pitfalls that have to be evaluated by the individual, but I haven't paid any interest on anything I've financed aside from my house and my wife's car ($20K - too much for this) in a long time. FWIW, I still have a credit score of over 750 as well.
zach harrison
Active Member
Alan, you're in Michigan correct? I'm not sure how interest is compounded as it's state to state, but if you are a front-end loaded interest baring state, then the advice above is completely accurate. If you have straight-line intrest (meaning, an fixed chunk of the payment goes to balance and another to interest no matter if its the 1rst or the last payment) then a lower rate would be beneficial. I live in MO and its front end. Good rule of thumb is that in these states, you pay 2/3 of the total interest in the first 1/3 of the term. So if you refinance after a year or so, you've basically lost half of the interest you've paid.
Last edited by a moderator:
Alan Beaulieu
Active Member
Zach,
My legal state of residence is Michigan. However, i am stationed at MCguire AFB, New Jersey. MY loan was approved through Service Credit Union, which had a small bank on base at Ramstein AB, Germany. Not sure how all that works into the equation
My legal state of residence is Michigan. However, i am stationed at MCguire AFB, New Jersey. MY loan was approved through Service Credit Union, which had a small bank on base at Ramstein AB, Germany. Not sure how all that works into the equation
zach harrison
Active Member
I would inquire to them how the interest is compounded. There is a chance that the loan is under German banking regulations, and could be completely different. Would you be refinancing there, or at a local bank in MI?
Gavin Allan
Well-Known Member
What if you refinance and shorten the term? I've done that and thought I saved a bit of money--there were no costs for setting up the loan.
zach harrison
Active Member
Gavin, here how you'd pay more in the long run.
5 years - Payment $400. Interest 5%
Your first payment of $400 may only reduce your balance by $20, the rest goes as interest expense. After the entire year, you may have paid (400x12) $4,800 but only reduced your balance $1000.
So you refinance and you have lost that $3,800 paid in interest. You can see how this works by amortizing the payments out.
5 years - Payment $400. Interest 5%
Your first payment of $400 may only reduce your balance by $20, the rest goes as interest expense. After the entire year, you may have paid (400x12) $4,800 but only reduced your balance $1000.
So you refinance and you have lost that $3,800 paid in interest. You can see how this works by amortizing the payments out.
zach harrison
Active Member
http://www.bankrate.com/brm/calculators/autos.asp
Go to this site, and put in your figures. Calculate, then hit the amortization chart. This shows how much interest is paid in each year.
Gavin, if your rate dropped a lot and you had paid your balance down before the refi, you could have saved some in the long run, but most refinances yield much higher returns to the lender.
Go to this site, and put in your figures. Calculate, then hit the amortization chart. This shows how much interest is paid in each year.
Gavin, if your rate dropped a lot and you had paid your balance down before the refi, you could have saved some in the long run, but most refinances yield much higher returns to the lender.
