Refinance Car To Pay Down Cards?

[gettingthere]

A few years of horrendous health bills have left me with a mountain of debt on a handful of credit cards. I make good money and am making progress paying them down, but I want to get better interest rates than I have on the worst cards (17 and 22%). What are my best strategies for doing so?

I have no equity in my home. My payment history is perfect, but my usage rate is high and I recently had one bank substantially reduce two of my credit lines after I tried to use a balance transfer offer they sent me.

Any tips on getting them to reduce my interest rates? My car is a paid-off 2002 Subaru that I have seen selling for about $10,000. Surely I can get a lot better rates and save a ton of interest every month, but I'm nervous about the credit report hit of getting another loan, too. What about peer-to-peer lending? Is that a good option?

[disneysteve]

I'm not sure where the refinance part comes in. You don't have a car loan so there is nothing to refinance. Are you considering using the car as collateral for a personal loan of some sort? If so, I honestly don't know how you would go about doing that.

Peer-to-peer lending is certainly an option. I'm sure you can do better on Prosper.com or LendingClub.com than 17 and 22%.

How much debt do you have at those rates? One thing to consider would be selling the car for 10K and buying something for half that or less, using the difference to pay down debt.

Of course, none of that should happen until you have slashed your spending to the bare minimum and gotten rid of all the unnecessary stuff like cable tv, anything beyond a basic cell phone plan if it is your only phone, netflix, gym membership, etc.

[gettingthere]

Thank you for the reply.

By "refinance" I simply meant to use it as collateral. I'm assuming that I can use a "regular" auto loan as an equity loan. I've thought about selling the car outright, but it's working well and is perfect for my needs.

I have about 5k at 22%, 20k at 17% and 25k at 4% fixed. (Don't get brain tumors, they're almost as bad for your financial health as they are for your physical health).

My spending has been slashed. I've sold a lot of stuff, worked second jobs, had roommates and I freelance when I can.

[jasonnoguchi]

Sell your car, pay off your cards and start over. I have no debt and I don't even own a car. Don't get stuck in debt over things you don't really need.

[disneysteve]

Don't get stuck in debt over things you don't really need.

Did you read OP's post? This debt is from medical bills related to a brain tumor, which I guess would qualify as something he didn't really need, but not in the way you were implying.

OP, I don't know that you can go out and get an auto loan if you aren't actually buying a car. You would probably have to go to a bank and apply for a personal loan. That may carry a higher rate than a typical auto loan but I'm honestly not sure.

[kork13]

I think what you're looking for is simply a secured loan, with the car as collateral. It's not really a car loan, but rather a type of personal loan. Unsecured (no collateral) personal loans generally have 10% or higher interest rates, but using your car as collateral should enable you to get a lower rate (by offering the car as insurance against you defaulting, you present a lower risk, and thus can get a lower rate). Do you have a long-standing relationship with a bank? That will also help. You basically need to talk to someone in the loan department, asking for a "secured" or "collateralized" loan. Good luck and good health to you....

[edimalo]

refinance your car loan

you can opt for ]car loan refinance and still enjoy your car.

Determine the monthly payment that fits your budget. If you have increased monthly income, then it is better for you to increase your monthly repayments.

Possibly reduce the interest rate of your existing plan so as to reduce overall interest rate. You can reduce the interest rates by negotiating with your lender.

[daviddane]

I would never buy a car on finance at a high interest rate better i will try to get it at a low interest rate. It will be a lot of beneficial if we get finance on very low interest rates.