refinancing the camaro..

[julio820]

i have a quick question guys..

I've been getting bunch of call from my insurance company (statefarm) asking with if i want to refinance my Camaro with them. they say they could offer me a better interest rate than what i have now (4.06%). (financed $22,000)

my question is.. Is it really worth it?

she told me she could offer me a 3.7% rate.

kept in mind that i just bought the car back in July, so i dont know if this would affect my credit on any way?

what are your thoughts?

[cab2g]

refinancing wouldn't affect your credit score more than a few tens of points. There are 2 dings you'll get that I know of. 1) the more credit inquiries you have the lower you score, and 2) opening a new line of credit always lowers your score and it gradually increases every few months thereafter. The amount financed does not affect your credit score as it is not a revolving credit line. With revolving credit, such as credit cards, having a high balance lowers your score, but the loan size for a car loan does not lower your score. Do you think people that finance Porsches have bad credit? Doubtful!

since car loans are so short, I think it'd be more of a hassle to refinance than to keep your original loan. If you have only made a couple of payments on a 60 month loan you'll save about $215 in interest payments at a 3.7% rate, but they may charge you a refinance fee and that may negate any savings at all (even if your payment ends up lower) Also if you have made several payments by the time the financing goes through, you are basically extending the length of your loan if say you had a 60 month loan and made 6 payments and get another 60 month loan. You'll basically be accumulating another 6 months of interest. which will also erode from the $215 savings I listed above. But it's really your choice.

[nyrfan]

Without knowing the exact specifics, the savings would be about $3 a month and $250 +/- in interest over the life of the loan. This is assuming there is no P/W fee and you do not add on any months.

Not worth it IMO especially since you will have to take another credit hit and have another new account on your credit reports. This will impact your score by a few points (5-10) in the short term.

[camaro_eddie]

good rule of thumb is, if you can't knock at least 1% off the interest rate it is not worth refinancing. the fees will be more than you save on interest most likely. best thing to do is just pay a little extra each month and pay the car off early.

[kiteman]

http://www.bankrate.com/calculators/...alculator.aspx

put in your loan amount and term and interest rate and you'll see that 3.7 vs 4.1 is practically nothing.

2.5% is about the lowest you can go anywhere right now, so if you can get that it might be worth the refi, but otherwise i would just not worry with it. 4.1% isn't bad at all, and is under the national average.

[Sir Nuke]

Originally Posted by camaro_eddie

good rule of thumb is, if you can't knock at least 1% off the interest rate it is not worth refinancing. the fees will be more than you save on interest most likely. best thing to do is just pay a little extra each month and pay the car off early.

so I would say NO, its not worth it

[Baba]

There are currently better interest rates out there. It's a competitive market. However, Stay / go with what you're able to afford and the institution you feel most comfortable in doing business with.

[julio820]

thanks guys.

she never mention anything about fees.

she did mention that statefarm offers gap insurance on all their car loans which i have no idea if i have it with my current bank. (suntrust)

[Baba]

Originally Posted by julio820

thanks guys.

she never mention anything about fees.

she did mention that statefarm offers gap insurance on all their car loans which i have no idea if i have it with my current bank. (suntrust)

GAP is DEFINITELY good to have. Make a call to find out from your bank.

[PAUL SS]

If you financed at a credit union, recheck their rates. I just modified my loan from 4.24% to 2.49% by walking in the door and signing one piece of paper. Easy!

[nyrfan]

Originally Posted by Baba

GAP is DEFINITELY good to have. Make a call to find out from your bank.

OP, keep in mind GAP is only worth it if you put little to no money down as GAP pays the difference between your loan and the depreciation value. If you put down anything over 5k, it's really not worth it as you have equity in the car.

[nyrfan]

Originally Posted by PAUL SS

If you financed at a credit union, recheck their rates. I just modified my loan from 4.24% to 2.49% by walking in the door and signing one piece of paper. Easy!

I belong to several CU's (11 to be exact), most will not refinance their own loan. You belong to a very consumer friendly CU. Which CU is that if you don't mind me asking as I'm always looking to join more.

[julio820]

i gave 10k down over a 30k car soooo i guess its not worth it?

[nyrfan]

Originally Posted by julio820

i gave 10k down over a 30k car soooo i guess its not worth it?

No, don't bother with Gap.