Question about modifying car loan.

[amdhunter]

I want to pay off my car note as quick as possible, but someone told me that I could be able to modify my current loan to pay off my car quicker.

If I owe 16000 with 4 years to pay, and put 10000 on the car, would the financing company be able to stretch the remaining 6000 over 4 years? Or would I have to keep paying the same higher amount every month?

I am looking into purchasing a home, and my car is my only debt. I would love to lower the payment on it now (and at the same time decrease any debt-credit ratio) and have more money to blow on a mortgage.

From what I read online, modifying any loan will lead to a huge reduction in credit score, but is this still the same thing in my case? Or would it be best just to pay the car off? Right now the KBB is ~$23k.

 

[dave_the_nerd]

Most loans don't alter the monthly payment when you pay ahead on the principle, they just move up the final payoff date. You'd have to ask your bank to know for sure.

No reason they couldn't refinance it, but then there would be a new loan issues, with the accompanying fees.

And yeah, you'd probably take some kind of hit on your credit score.

 

[amdhunter]

Most loans don't alter the monthly payment when you pay ahead on the principle, they just move up the final payoff date. You'd have to ask your bank to know for sure.

No reason they couldn't refinance it, but then there would be a new loan issues, with the accompanying fees.

And yeah, you'd probably take some kind of hit on your credit score.

Ah, screw it then. Not worth the trouble. Thanks

 

[waffleironhead]

Unless they changed things recently, I wouldnt expect it to ding your credit score. I've refinanced my cars before and it didnt affect my score at all. This was ~2000 and 2004 so things may have changed. If you were doing a re-fi to pull equity out of the car, then I could see it dinging you, but thats not the case here.

A simple refinance to change the duration of the loan is pretty simple, if your lender balks and you can get a better rate elsewhere, take your business and go. One thing to consider though is you may be adjusting your debt to credit ration, but you are also changing your monthly cash flow.

 

[Redfraggle]

Refinancing a car is never worth it unless it's your only choice in the face of losing the car entirely and you'd have no way to purchase another. Save the 10 grand to put on a house. If it's your only debt and your debt to income ratio is ok, it won't be a big deal.

 

[highland145]

You should be able to apply the interest to the principal or as a payment advancement.

Advanced payment=you could pay smaller payments every month until end of the contract. Will also end up not saving any interest on the loan.

Principal payment=continue to pay same payment now, payoff way earlier, save interest.

Refi isn't a modification. It's just a new loan, paying off the old. Insignificant credit hit, imo.

edit:If you refi, you'll take a serious hit on the interest charges because you've paid a large portion on the interest on the current loan already.