Should we refinance?

Question

My husband and I bought a car a little over a year ago, we have a high interest rate with monthly payments of $447. We have negative equity of about $9,000 from a previous car. (GRRR!) My question is, would it be smart to try and refinance to get a lower interest rate or should we just stay where we're at? We have three years left of payments.

Answer 1

If I were you I'd just leave it how it is. Three years really isn't that long. A lot of times when people have negative equity such as yours banks won't allow you to refinance without a hefty down payment.

Answer 2

It definitely doesn't hurt to try, but you will likely have a tough time finding a lender that will finance you when you have that much negative equity.

For example, no one will likely want to let you borrow $20,000 when you only have $11,000 as collateral.

Answer 3

I have been told that if the lower interest rate is more then 1% of the original then it could be a good idea.  Just make sure if you do refinance that you do not extend the months.  Refinance with the same number of payments left.