LightStream Auto Refinance Loan Help

[rffanat1c]

So here's the deal. I've got a credit score of 806, income is 86K a year and we have two cars. Here's what I owe:

Car 1: $17,632.43 Rate: 3.35% Monthly Payment: $368.55 50 months left

Car 2: $18,017.68 Rate: 3.99% Monthly Payment: $322.08 62 months left

Other Car Loan: $6,079 Rate: 10.25 % Monthly Payment: $109 No end on months, just until its paid off.

So right now I pay about $799 a month for these three. I could get a Lightstream loan for the combined amount and have a rate between 3.89% and 4.89%, monthly payment between $567 and $587 for a term of 84 months. Also since its an unsecured loan, I will get both titles to my vehicles allowing me to sell them whenever I want. Flip side is, if I sell both cars (only if I have to) I can pay most of the loan off, but will be stuck with nearly a $600 payment that I can't roll into anything or refinance. So I could be paying $600 on a $8,000 balance.

According to a calculator, using light stream would save me about $2k in interest but that's if I take the full amount of time to pay off these cars (which is likely what would happen) My main question is, should I roll it all into one payment and lock myself into this payment or just try to chip the $6k down to 0 and just keep the car loans traditional. Thanks all.

[dczech09]

Car 1: $17,632.43 Rate: 3.35% Monthly Payment: $368.55 50 months left

Car 2: $18,017.68 Rate: 3.99% Monthly Payment: $322.08 62 months left

Other Car Loan: $6,079 Rate: 10.25 % Monthly Payment: $109 No end on months, just until its paid off.

So right now I pay about $799 a month for these three. I could get a Lightstream loan for the combined amount and have a rate between 3.89% and 4.89%, monthly payment between $567 and $587 for a term of 84 months.

Based on this information...

Car 1 pays off in 52 months, $1,319 interest paid
Car 2 pays off in 62 months, $1,951 interest paid
Other Car pays off in 77 months, $2,212 interest paid

Under your normal plan, you would pay about $5,482 in interest.

Under the Lighstream loan, you would be in debt for 84 months AND pay a total of $7,643. So actually you would pay more under the Lighstream plan (but of course they won't tell you that). This is based on a 4.89% APR and a $587 monthly payment.

When evaluating whether or not a loan consolidation is a good idea, it is important to consider 3 things...

1) Total interest. Not only would you be in debt longer with the consolidation loan, but you would actually pay more in interest as a result. Based on this factor alone, the consolidation with Lighstream would be a bad idea.

2) Weighted average interest rate. The weighted average interest rate for your three car loans is 4.63%, so depending on what rate Lighstream would give you, you could pass based on this factor.

3) Behavior change. Why are you borrowing so much on cars? Why not just sell the cars and pay with cash? Why do you insist on following this path of being in debt? Sure, you have a great credit score. But what are you getting for it? What do you have to show for it? Couldn't you do better things than sacrifice these payments towards car loans? Is consolidation going to help you pay off your debt so that you STAY out of debt? If you are just going to stay in debt, then whats the point? All you are doing is exchanging one debt for another.

I do not expect a response on item 3. These are mainly rhetorical questions to think about. I for one believe that car loans are one of the worst type of debt that you could possess simply because people usually keep car payments their entire working lives and lose out on investing that money for far greater return.

At any rate, you question was in regards to the Lighstream loan. I would NOT take on that consolidation if I were you. Even if you get the lower interest rate and lower payment, you will stay in debt longer and pay more in interest. It is import that you do the math on these types of deals and not listen only to what the consolidator says. In this case, they either lied to you or did not disclose something. Neither, makes them look good. Steer clear! ;