Should I refinance my car or trade it in?

Question

I got a 2003 Corolla last year around June and the interest rate is 18.99% and my payments are $456.00/mo . So I was wondering if it is better for me to refinance the car so I could get a lower rate and pay less. Or go and Trade it in for a new vehicle and start fresh again, because c'mon its an '03. If I decided to trade it in for a new one. Do I have to go to the same dealership? or how does that work?

Answer 1

Refinance ur car and in that way your monthly is low then pay as much as u can to pay it off.   You lose money from trading it in.  They get u eith way from trading or not.  You're throwing money away.

Answer 2

Has your credit situation vastly improved in just one year that you believe you'll get a large reduction in your APR? That's very doubtful. If you've made every payment on time -- you were never late -- and the rest of your credit has improved, you may get a 15% APR.

BUT no one will refinance you. You're way too upside down in your car. By more than $8,000! In order to be refinanced, a loan company wants to be in an equity position in case they need to repo the car and sell it at auction. You are far from an equity situation.

If there is a loan company that will give you a personal loan to refi it, keep in mind you'll be paying $14,000 plus interest, which at 15% would come out to a grand total of $24,500 on a 5 year note. And your payment would be $408.34 for 60 months. A savings of only $47.66 a month.

Personal loans, unlike real car loans, do not offer an interest rebate if you pay it off sooner. You have to pay the entire amount, or $24,500. So at the end of the term, in 2013, you'll have paid $24,500 plus $5928 in payments you've already made to the current finance company. The bottom line is you'll have shelled out a grand total of $30,428 for a car that will then be 10 years old and worth maybe $2000!

Don't listen to anyone who says they'll refi your car. It won't be a true car loan and you'll have wasted about $28,428 on a $2000 car!

Answer 3

From a refinance company perspective, in case you were wondering if the new car manager was steering you wrong, he is right. You are way behind on the value of your car versus the amount you owe. Most companies won't look at loans with over 150% loan to value.

I'm not saying it's not possible at all just highly unlikely.

I will disagree though about your credit score, it could have gone up and make refinancing a choice for you. We have seen stranger things and people's credit getting better is why we are still in business.

So my two points of advice:

1. Refinancing applications are free, there is no harm in asking. Just don't ask the world to pull your credit. ;)

2. Don't buy another new car. Get a decent used one and shop around for a better deal on your loan. If you can't get one, don't sell the current car. No reason to sell if you can't recoup your money and/or get a better deal.

Best of luck!

Answer 4

Sorry you got "HAD" on that deal. You could buy a NEW Yaris for around 13K. A new Corolla are going for around 17K these days.

Answer 5

depends on how much you own on it... if you own more on it than it is worth you will lose money by trading it in. i'd say refinance unless you have liek 1 or 2 grand left on it, then just pay it off as soon as possible

thats a terrible intrest rate and the company who gave it to you should be shot