Looking for a lower rate – refinance or get a new car?

[Shirley]

My current car was bough 20 months ago. When I bought it I had a bankruptcy and a few tax linens on my report, and my score was 510. The loan I got from Capital 1 was for 72 months with a 17% APR.

Since then my score has gone up, and last month was around 650-680 (depending on the credit bureau). However, when I tried to refinance I was turned down because of my credit past.

I was wondering whether it will be easier to trade off my current car into a newer one simply and get new financing instead of refinancing. This way I’ll save a lot of money since a lot more will go toward the car instead of interest. I’m looking into a 72 month loan with around 6.9% APR.

Any thoughts?

[Stacy Wall]

I strongly advise against a 72 months loan!

It looks like you have lots of negative equity. I strongly advise against a 72 month loan. It just gets you into a higher rate and a term longer than you’re likely to own the car. Rolling in negative equity and taking out another 72 month loan will just get deeper and deeper into negative equity.

B.T.W – 6.9% is still high.

I would suggest instead paying off your negative equity, saving up a down payment and finding something affordable that you can get with a 36 month term.

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