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    Auto Loan Refinance?

    I currently have an auto loan on a $44k van at 3.19% APR. The monthly payments are $527.48. I currently owe $18,500. I am considering refinancing it to lower the payments but I will continue paying the same amount I pay now towards the loan to pay it off faster.
    My only hesitation is that the rate will be closer to 4% now. Is it worth taking on the extra interest and extending the term since I will be paying it off sooner by keeping the payments at $527 ish?

    #2
    Assumptions:

    5-year loan at 3.19%
    Original Loan Amount: 29200 (appx).
    Total Expected Interest: $2430
    Interest Paid to Date: $1477
    Payoff Time = 5 years (Aug 2020).

    Refi:
    5-year loan at 4%
    Loan Amount: 18500
    Extra Payment: $527 (340+187)
    Interest: $1206
    Payoff Date: Oct 2020

    Summary:
    total interest: 1477+1206 = 2683 (vs 2430)
    Cumulative Payoff time from original loan: 5 years, 2 months

    Winner: Keep the current loan* (based on interest)

    *unless my assumptions were way off.
    Last edited by Jluke; 07-18-2017, 07:38 AM.

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      #3
      Originally posted by bigoilman View Post
      I currently have an auto loan on a $44k van at 3.19%

      the rate will be closer to 4%
      If you refinance to a higher interest rate, it is going to take longer and cost more to pay off the loan. That makes no sense. Keep the loan you have.
      Steve

      * Despite the high cost of living, it remains very popular.
      * Why should I pay for my daughter's education when she already knows everything?
      * There are no shortcuts to anywhere worth going.

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        #4
        Originally posted by disneysteve View Post
        If you refinance to a higher interest rate, it is going to take longer and cost more to pay off the loan. That makes no sense. Keep the loan you have.
        the wrinkle was he was going to keep the same payment amount for the new loan (527 vs 340 new payment)... my math above shows it is a close call but with the edge going to just paying on the current loan.

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          #5
          Thanks for the reply Jluke. The original loan amount was for 40k. Not sure if that changes things drastically. My hopes would be that the extra payment each month would shorten the payoff length enough to counteract the added interest. But if it is going to be that close, I'll just stick with what I got I guess. Thanks!

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