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      01-26-2013, 11:11 AM   #1
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Help! Refinance or not to.

As the title states I have a finance dilemma. I am currently paying higher APR rates on my car loan.
But I am currently paying less on monthly payment, due to special finance rate from dealer.
I been per approve for a lower APR rates, with refinance from another lender. But will have to pay higher monthly payments.

Currently I have a $30k loan on the car and here is the run down.

Current 5.99% APR for 60 months with dealer.
Monthly payments $324.26.
Balloon payment of $10544 at the end of 60 months
Interest I have to pay at the end of 60 months $8985.
But planning to pay off the car in 2 year with an estimate interest of $3954.

Refinance at 1.95% APR for 60 months from other lender.
Monthly payments $525.18.
No balloon payment.
Interest I have to pay at the end of 60 months $2925.
Paying off the car in 2 year interest at $1170.
But can't refinance until the title comes in.

Or after 3 finance payments, I can try to refinance with BMWNA and see if they can match the lower APR rate.

I know it is a no-brainer and go for the lower APR rates, but the lower monthly payments is what getting me. Please help.
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      01-26-2013, 11:27 AM   #2
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Quote:
Originally Posted by Team Plutonium View Post
Wait, you are concerned about $200.92 more a month? No offense, but you bought the wrong car.
You have not seen the new 2% tax increase that is taking a chunk out of my pay check. $200 extra is a lot and will go into rent, food and everything else. I am not making $100k a year and every little bit helps.
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      01-26-2013, 12:22 PM   #3
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Quote:
Originally Posted by Team Plutonium View Post
Wait, you are concerned about $200.92 more a month? No offense, but you bought the wrong car.

Not really sure what this has to do with the question. $200 a month is not chump change no matter how much you make a year. That amount can easily pay off other bills (most importantly a mortgage) or enhance quality of life in other areas. I for one love my M3 but not $200 more a month type of love.

OP if you're strongly considering paying the vehicle off in 2 years consider keeping the loan as is and put the additional payments towards the loan as planned. This way if things get tight for a month or two you can revert back to your $300 payment. Not the most economical advice but more a best of both worlds option.

Last edited by Bimmr7; 01-26-2013 at 12:24 PM. Reason: Spelling correction
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      01-26-2013, 12:37 PM   #4
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Op, I think you already know the answer to your question. Under normal circumstances, I would suggest going with the lower apr, but you seemed slightly concerned about the extra $200/ month, so just keep your current payment and do as suggested above ie pay it off in 2 years, if you can. GL
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      01-26-2013, 05:06 PM   #5
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Thanks for all the comments. I have decided to refinance with lower APR.
The money save on interest will go to future items on the car.
Possible a Akropovic full exhaust.

The reason why I am so set on paying off the car in 2 years, is to build up credit.
My credit right now is on excellent but I have no history of loans.
That is why I am unqualified for the 3.19% APR that BMW was offering for the M3.

All of my previous cars I pay off in full, when I pick it up.
I never had a loan and this will be a good way to build history.
In the future I will possible get better APR rates, when I decide to buy a house.
All of this is just a foundation to work on.
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      01-26-2013, 05:32 PM   #6
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Quote:
Originally Posted by Team Plutonium View Post
I disagree with this. If you choose to drive a $70K car you shouldn't be too worried about $200 a month more. I'm not saying it shouldn't matter, but if $200 a month truly affect your overall lifestyle you live beyond your means.
I just bought a new M3, if the payment was $200 a month more, I would not have taken it on. I guess I am driving the wrong car and living beyond my means. One question, where do you draw the line? How about $400 more....??
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      01-26-2013, 06:04 PM   #7
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Quote:
Originally Posted by And1M3 View Post
You have not seen the new 2% tax increase that is taking a chunk out of my pay check. $200 extra is a lot and will go into rent, food and everything else. I am not making $100k a year and every little bit helps.

LOL yeah no kidding. Complete bullshit. The tax hike is basically costing me and extra mortgage per month..
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      01-26-2013, 06:39 PM   #8
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OP, another option to consider, will the lender provide the same rate at 72 months? This would put your payment (roughly) at $440. However, make the payments as if it was a 60 (or less) month loan but you have some protection if your budget is running tight in a given month.

I understand and agree with Team Plutonium's point of going with a higher payment and direct more of the money towards the principle. However I don't know your budget nor is it any of my business (to know). Assuming that you plan on keeping the M3, at the current payoff level, knowing that after 5-years, there's still a $10k balance.

Have you applied at PenFed? Great rates. Per your statement on lack of installment loan history, I don't know how much this would impact PenFed (or another credit union) from approving of a refinance.
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      01-26-2013, 07:06 PM   #9
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It's not a new tax. It's just been restored. It went away for a year then the rate was reduced from 6.2% to 4.2% last year and was not extended as part of the budget bill passed at then end of 2012.
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      01-26-2013, 09:17 PM   #10
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Worried about being squeezed by $200 more per month and then talking about buying a 6 grand exhaust a couple posts later doesn't make a lot of sense to me, but hey it's your money.
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      01-26-2013, 09:48 PM   #11
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Quote:
Originally Posted by Team Plutonium View Post
That's not the discussion we are having. OP is refinancing to get a better interest rate, which in the long run will save him money. If you decide that an additional $200 (or whatever) isn't worth it before buying the car that's very different.
Nothing wrong with wanting to save some money, no matter how much the amount, however, if the OP is so concerned about the finances, why is he looking at an Akra exhaust !!!!

I have personally never financed a car for more than 3 years....ever. If I couldn't afford the payments on a 3 year loan, then the car was too expensive. I just never saw the sense in paying that much interest, period. If you need to finance a car for more than 3 years to afford the monthly payments, then you are really pushing the limits of prudent spending IMO.
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      01-26-2013, 09:59 PM   #12
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Quote:
Originally Posted by LarThaL View Post
I have personally never financed a car for more than 3 years....ever. If I couldn't afford the payments on a 3 year loan, then the car was too expensive. I just never saw the sense in paying that much interest, period. If you need to finance a car for more than 3 years to afford the monthly payments, then you are really pushing the limits of prudent spending IMO.
Interest rates nowadays can be had in the 1.49% range. Hardly impactful on overall spending. IMO its more foolish to pay cash when financing can be had at such low rates.
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      01-26-2013, 10:14 PM   #13
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Quote:
Originally Posted by gatorfast View Post
Interest rates nowadays can be had in the 1.49% range. Hardly impactful on overall spending. IMO its more foolish to pay cash when financing can be had at such low rates.
+ 1. Why wouldn't you take the max loan term on a 1.9 apr ? Foolish to say cars should be paid off in 3 years. I buy and sell cars all the time lil 1-2 a year and I always use the banks money. Interest rates are great. Ill keep my money in the bank
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      01-26-2013, 10:14 PM   #14
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I wouldn't have financed a car to begin with. Not paying interest on a depreciating asset.
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      01-26-2013, 10:22 PM   #15
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Quote:
Originally Posted by sycd View Post
Worried about being squeezed by $200 more per month and then talking about buying a 6 grand exhaust a couple posts later doesn't make a lot of sense to me, but hey it's your money.

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      01-26-2013, 11:43 PM   #16
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I don't think we can be helpful in your situation. It's your life and you decide on what's more important to spend more money on. On the paper, I think the lower rate and shorter term with higher payment makes more sense. However, it really depends on how comfortable you are to stretch that extra $200/month. For some $200 is only pocket change and for some that makes night&day difference. Obviously for m3 buyers, having a car to drive for work/school isn't the only reason they choose this particular car. If you can live comfortably with the monthly payment, nothing is wrong though.
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      01-27-2013, 04:05 AM   #17
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Quote:
Originally Posted by HeartMD View Post
LOL yeah no kidding. Complete bullshit. The tax hike is basically costing me and extra mortgage per month..
Yes we will have to put in more over time to make up for that lost in our paycheck.

Quote:
Originally Posted by yinlee View Post
It's not a new tax. It's just been restored. It went away for a year then the rate was reduced from 6.2% to 4.2% last year and was not extended as part of the budget bill passed at then end of 2012.
I think the 4.2% tax was during the end of the Bush era. That was like 4 or 5 years ago.
I remember before the tax decrease everyone would get a $300-$700 IRS check at the beginning of the year.
But they toke it away to give us lower tax rates. I wonder will they bring it back.
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      01-27-2013, 04:15 AM   #18
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Quote:
Originally Posted by sycd View Post
Worried about being squeezed by $200 more per month and then talking about buying a 6 grand exhaust a couple posts later doesn't make a lot of sense to me, but hey it's your money.
If you read that I stated " The money save on interest will go to future items on the car"
It doesn't mean right away. Also there was a use Akrapovic full exhaust for $4k a couple of days back.
There are always deals, but you just need to look for them.

Quote:
Originally Posted by LarThaL View Post
Nothing wrong with wanting to save some money, no matter how much the amount, however, if the OP is so concerned about the finances, why is he looking at an Akra exhaust !!!!

I have personally never financed a car for more than 3 years....ever. If I couldn't afford the payments on a 3 year loan, then the car was too expensive. I just never saw the sense in paying that much interest, period. If you need to finance a car for more than 3 years to afford the monthly payments, then you are really pushing the limits of prudent spending IMO.
Looking at the Akra for now. I might pull the trigger after 2 years of paying off the car.
But I won't hold back if a great deals come by and I miss my chance like before.

Quote:
Originally Posted by uplusd View Post
Who doesn't want Akra with carbon fiber tips.
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      01-27-2013, 04:27 AM   #19
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The expired 2% reduction in the payroll tax was only for the last two years, and is in no way connected in time or policy to the refund check paid out in 2001 and 2008 which was also only $300-600, and only for some households depending on income and marital status, and which were total one-offs, not a regular thing.

Sorry, I know this is only tangentially related, but ignorance about this stuff bugs me. You likely saved more than $300 from the cut of the last two years, but just didn't notice it as it wasn't in a single check.
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      01-27-2013, 04:34 AM   #20
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Quote:
Originally Posted by NHman View Post
OP, another option to consider, will the lender provide the same rate at 72 months? This would put your payment (roughly) at $440. However, make the payments as if it was a 60 (or less) month loan but you have some protection if your budget is running tight in a given month.

I understand and agree with Team Plutonium's point of going with a higher payment and direct more of the money towards the principle. However I don't know your budget nor is it any of my business (to know). Assuming that you plan on keeping the M3, at the current payoff level, knowing that after 5-years, there's still a $10k balance.

Have you applied at PenFed? Great rates. Per your statement on lack of installment loan history, I don't know how much this would impact PenFed (or another credit union) from approving of a refinance.
I am already approve for refinance with lower rates. I just need the car title to seal the deal. But I will see if BMWNA will match the refinance rate and let me keep the balloon payments.

Quote:
Originally Posted by py0413 View Post
I don't think we can be helpful in your situation. It's your life and you decide on what's more important to spend more money on. On the paper, I think the lower rate and shorter term with higher payment makes more sense. However, it really depends on how comfortable you are to stretch that extra $200/month. For some $200 is only pocket change and for some that makes night&day difference. Obviously for m3 buyers, having a car to drive for work/school isn't the only reason they choose this particular car. If you can live comfortably with the monthly payment, nothing is wrong though.
$200 extra is not going to hurt my wallet. I can easy live comfortably with that payment. If times get hard, I still have stocks that I can sell.

Quote:
Originally Posted by Bimmr7 View Post
Not really sure what this has to do with the question. $200 a month is not chump change no matter how much you make a year. That amount can easily pay off other bills (most importantly a mortgage) or enhance quality of life in other areas. I for one love my M3 but not $200 more a month type of love.

OP if you're strongly considering paying the vehicle off in 2 years consider keeping the loan as is and put the additional payments towards the loan as planned. This way if things get tight for a month or two you can revert back to your $300 payment. Not the most economical advice but more a best of both worlds option.
I could pay off the car now, but choose not to. Just need to build a loan history for later use. Plus that money is going to something else and the GF will kill me, if I spend it.

Quote:
Originally Posted by Smokey View Post
Op, I think you already know the answer to your question. Under normal circumstances, I would suggest going with the lower apr, but you seemed slightly concerned about the extra $200/ month, so just keep your current payment and do as suggested above ie pay it off in 2 years, if you can. GL
I already decide to go with lower APR rate.
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      01-27-2013, 04:44 AM   #21
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Quote:
Originally Posted by mmcnulty View Post
The expired 2% reduction in the payroll tax was only for the last two years, and is in no way connected in time or policy to the refund check paid out in 2001 and 2008 which was also only $300-600, and only for some households depending on income and marital status, and which were total one-offs, not a regular thing.

Sorry, I know this is only tangentially related, but ignorance about this stuff bugs me. You likely saved more than $300 from the cut of the last two years, but just didn't notice it as it wasn't in a single check.
Sorry I didn't remember these stuff. The only thing I will start remembering is when my paycheck is being hit. Thanks for correcting me.
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      01-27-2013, 06:50 AM   #22
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Quote:
Originally Posted by And1M3 View Post

I already decide to go with lower APR rate.
After all of the posts on your original question, in the end, good move.
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