Question: How to refinance my car? is it beneficial or just marketing?

(Posted by: ciccio on 2009-11-12 05:21:59)

I have a 2008 Honda civic in excellent condition, I bought it for $19, 000 two years ago, I owe $14, 000 on it. I really love this car and I don't want to get rid of it, but the payments and insurance take about %50 on my income and I need the money, I am a student and i have a little baby, I need to find a solution. Is there anyway to re- negotiate the loan, or am I pretty much stuck with it? i hear people talking about refinance here and there, how does it work? I've seen this car being sold for $10, 000 +/ - Wouldn't it be more beneficial for the loaner to renegotiate? Thanks for any input, I want to have a good financial record, don't want to screw it up....

Posted by: Lil_Dog on 2009-11-12, 05:35:15

To recap your story: You owe $14,000 on a car that is worth $10,000. I don't know that you are going to be able to refinance. The first thing that would happen in a refinance is the first lien gets paid off. Then, you get a new loan with different terms. It looks like you are looking for a lower monthly payment. That would happen by increasing the term to pay off the loan and/ or lowering the interest rate being charged. Perhaps, you could explain to your current lender or a small town credit union that they are already in an unsecured position due to the negative equity situation you are in, and that extending the term would give you more monthly cash flow. The increased cash flow is to their benefit as the payments are easier for you to make. Good luck; you'll need it.

Posted by: Professor Wonderful on 2009-11-12, 06:06:00

You state that you want a good financial record. You "don't want to screw it up ". You already have. You do not appear to be smart enough to avoid fouling up your credit. Nobody with an IQ above room temperature is going to pay about half of their monthly income for a car. The salesman (or woman?) realized you are a fish. You were hooked. Please invest twenty dollars in Dave Ramsey's book, The Total Money Makeover. You really need this. If you desire, you may contact me through Yahoo Answers and I will send you an easy-to-understand program to assist you in handling your finances. It is free. IMPORTANT: This offer is not an attempt to entice you to become a client! You do not mention your marital status, so one could surmise you are unwed. Do you have the ability to obtain funds from another person? Buying a new car is almost always a bad idea. (Another book you may wish to skim over is The Millionaire Next Door. One chapter lets you know why rich people do not buy cars that are new.) Clearly you take care of your assets, as manifested by you comment about the condition of your over-priced purchase of a depreciating asset. In your future decisions, do your child a favor and avoid purchasing depreciating assets on credit. The thousands of dollars you waste could be put to wiser use for the benefit of your child. Do you have a friend that will take your car and continue making payments for you? This can save your credit rating while allowing you to buy transportation that you can afford. You are obviously young and inexperienced. This car is too much for you. If you have a lawyer in the family, contemplate a suit against the dealership that conned you into a horrid purchase that a reasonable and prudent person would never have consummated. If you contact the holder of the note, as dealerships rarely carry the paper on a new vehicle, you might be lucky enough to have them drop most of the interest that is due them. Unlikely, since you are legally obligated if you signed when you were over 18 and of sound mind. (This point may allow a lawyer to enter on your behalf.) You could contact a bankruptcy attorney to contemplate the most difficult route. I would not recommend it, but in your case if could be justified. However, the underlying problem is your lack of financial maturity. I would surmise that if you escaped liability entirely, you would soon make a decision that would be just as irresponsible. Read that book, The Total Money Makeover, before you ever try to make an intelligent decision that involves major amounts of money. Since you did make the irresponsible decision to purchase a car you cannot afford, my guess is that you have few assets to protect. Decisions as foolhardy as yours are a detrimental sign. If you do not have assets to protect from a lawsuit, contemplate lowering your insurance coverage. If you drive in an irresponsible manner and cause an accident, you can be sued. However, you have nothing worthwhile to attach, correct? Can you quit school and work? Can you work extra hours delivering pizza? Can you do something worthwhile to increase your income? Can you engage in freelance work through a legit outfit like Guru - so you can be with your child while earning money in a field where you are at least somewhat skilled? Please read that book. You really need assistance. The average girl does not read one book a month. That is why she is average. We all make decisions in life, and we earn the consequences of our decisions.

Posted by: jlf on 2009-11-12, 06:31:15

You are stuck with it. You bought more car than you can afford. It is very unlikely that you'll be able to refinance that loan. Work on ways to increase your income instead.

Posted by: oliver_45140 on 2009-11-12, 15:26:18

I agree with Prefessor Wonderful except for all of the judgement. Bottom line is you need to sell the car. 50% of income toward a car is way too much!! That's why I dont drive a Mercedes. I love them as you love your Honda but I cannot afford it. Good luck.