Stupid car loan question

[dabuddha]

So I'm looking to sell one of my 2 cars and purchase a new (used) one. With a family of five, I really can't sell my old car first and then buy the new (used) one since we really need two cars at all times and it might be a few weeks before I find the car I really want.

I'm looking to get about $10k for my old car which I will put towards the new (used) car. I'm trying to figure out how to work the financing for this. I got a pre-approval for $30k which will be more than enough to pay for the new vehicle but my monthly payment will be pretty high (About $425/month).

I really only need a long term loan of about $17k (since I plan on using the $10k from my old car towards the new one) which would make my payment about $258.

Any suggestions or ideas on how I can do this? Is it possible to "refi" an auto loan? Meaning I buy the new car @ $27k, sell my car and get my $10k, refi the loan and make it a $17k loan instead sort of thing? Or is there an easier way to do this.

TIA!

 

[jlee]

Yeah, you can refinance it. Penfed usually has pretty solid rates.

 

[Gunslinger08]

Sounds like a 6 year loan? I'd verify that your refi place will do 6 year refi loans. I've refinanced through State Farm before, but it was a 4 year loan.

 

[JoeBleed]

What kind of car are you thinking about buy used in the $30k range? If your max loan of $30k isn't your target range, what is your target range? I'm not sure you can refinance the same year you get the loan. maybe, i've never tried. What interest rate is your pre-aproved loan at? how many months/years? If you pay extra on the loan, will it go towards the principal or interest of the loan? i'm not sure if everywhere requires over payments to put the extra towards principal now or not.

 

[dabuddha]

What kind of car are you thinking about buy used in the $30k range? If your max loan of $30k isn't your target range, what is your target range? I'm not sure you can refinance the same year you get the loan. maybe, i've never tried. What interest rate is your pre-aproved loan at? how many months/years? If you pay extra on the loan, will it go towards the principal or interest of the loan? i'm not sure if everywhere requires over payments to put the extra towards principal now or not.

Currently I'm torn between 2 vehicles. One is a 4x4 pickup (haven't been able to pick one yet) and the other is a Dodge Challenger. I'm trying to keep the vehicle around $25-27k max (cheaper is better of course).

1) The loan I got pre-approved for was @ 2.99% with a 10% down payment (apple FCU)
2) 6 years for the loan. The goal is to pay it off early but I want my payments to be low so it doesn't stress my budget too much
3) I'm waiting to hear back from the loan officer on whether my payments go towards the principle or interest. I do believe it'll go towards the principle if I designate it as such but the issue is, my payment amount will still be high ~$425 / month.

 

[Viper GTS]

This is a situation where it may be much less hassle to just trade your car in rather than try to sell it private party. The tax savings of trading in (reducing the purchase price) may also offset a large portion of the typical delta between private party and trade in value, and if you buy from a dealer/CPO you may even be able to get manufacturer promo rates that are better than what you've been approved for now. You also don't have the risk of not being able to secure refinancing.

It's worth considering at least, and certainly a lot less hassle.

Viper GTS

 

[dabuddha]

This is a situation where it may be much less hassle to just trade your car in rather than try to sell it private party. The tax savings of trading in (reducing the purchase price) may also offset a large portion of the typical delta between private party and trade in value, and if you buy from a dealer/CPO you may even be able to get manufacturer promo rates that are better than what you've been approved for now. You also don't have the risk of not being able to secure refinancing.

It's worth considering at least, and certainly a lot less hassle.

Viper GTS

It would definitely be less of a hassle. The problem is, the most they would offer me was $7500 and the KBB value of my car is sitting at about $10.2k I see similar cars selling (at other dealerships) for $12-13k and I see the same vehicle (with much higher mileage) on craigslist for $10-11k.

I told the dealer the minimum I'd take was $9500 and they wouldn't budge. I was ready to purchase the Challenger they had for sale @ $26.2 but ended up walking because of that.

 

[jlee]

If you're looking for a 6yr loan to avoid stretching the budget too much, I'd recommend looking for something in a lower price bracket (there are a lot of excellent options well under $20k). Also keep in mind a car that's $10k on CL might be selling for $8k.

 

[dabuddha]

If you're looking for a 6yr loan to avoid stretching the budget too much, I'd recommend looking for something in a lower price bracket (there are a lot of excellent options well under $20k). Also keep in mind a car that's $10k on CL might be selling for $8k.

6 years to keep the payments low but I plan on paying it off in about 3 years. It's how I did my minivan few years back. I like not having the stress of a large payment and it gives me the freedom to make extra payments that I apply towards the principal. $26k is a lot of money, no question but I'm considering this to be my pre-midlife crisis car I've been conservative with my money and vehicles for over 20 years now.

My plan was to list the vehicle for 11k and take 9.5 as my minimum price. I did something similar with my older van and it took about 3 weeks but I eventually got the price I was asking for.

 

[thomsbrain]

The short answer is yes, you can refinance cars.

 

[iamwiz82]

Another option, which may be vilified here, is to lease the car for a lower payment, keep the existing car and sell it on your own, then set that money into a savings account for the term of the lease for a future down payment. If you have an employee purchase code you could probably get a $30k Challenger for $200-$225/mo.

 

[michal1980]

It would definitely be less of a hassle. The problem is, the most they would offer me was $7500 and the KBB value of my car is sitting at about $10.2k I see similar cars selling (at other dealerships) for $12-13k and I see the same vehicle (with much higher mileage) on craigslist for $10-11k.

I told the dealer the minimum I'd take was $9500 and they wouldn't budge. I was ready to purchase the Challenger they had for sale @ $26.2 but ended up walking because of that.

did you try carmax?

 

[dabuddha]

did you try carmax?

Yeah I did. They offered me $7k for my car which is really low so I passed on them.

On a related side note, I was trying to sell my 97 grand caravan 2 months ago (106k miles on it) and they offered me $200 for it. I left, put it on Craigslist, and sold it for $1800 in about 2 weeks.

 

[dabuddha]

Another option, which may be vilified here, is to lease the car for a lower payment, keep the existing car and sell it on your own, then set that money into a savings account for the term of the lease for a future down payment. If you have an employee purchase code you could probably get a $30k Challenger for $200-$225/mo.

Never done a lease before. Let's say I do lease the vehicle and decide to keep it, what would the average payoff amount be? Like is it based on some sort of percentage?

 

[iamwiz82]

Never done a lease before. Let's say I do lease the vehicle and decide to keep it, what would the average payoff amount be? Like is it based on some sort of percentage?

Yes, it's a percentage set by the bank. You will get that info right from the start during negotiations. Edmunds forums usually have people who will leak the residuals and the interest rates from Chrysler Financial.

I just looked up some and gave my estimate on payment given a pretty weak negotiation of 10% off MSRP. This includes 6% tax and is $0 down other than the first payment and whatever title and registration fees.

36mo / 12k year

SXT Plus - .00091 / 55% - $308/mo
RT - .00070 / 60% - $282/mo
RT Plus - .00108 / 54% - $385/mo
Scat Pack - .00200 / 59% - $447/mo

The first number is the lease rate, multiply by 2400 for interest. The second is the residual after the term. Add 1% for a 10k/yr lease and subtract 2% for a 15k lease. The last number is what I got when I plugged the numbers in my lease calculator. These are Chrysler Financial numbers only, other banks usually have higher interest rates but offer huge rebates.

That being said, a less in demand vehicle will yield greater savings. A 300 or Charger can be had for .5% of MSRP as a monthly price if you work it.

The number to shoot for is 1% of MSRP each month. Hit that and you did well.

 

[dabuddha]

So I spoke with the loan officer and she said I can re amortize the loan once I have the money from the sale of my car.

I'm going to have to look into the whole lease thing. I never considered it. My situation has always been to keep my cars till they die so this will be the first time I'm selling a car early (my current vehicle)