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by Peterj on February 13th, 2005

Peterj

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I accepted a high interest car loan. I was told that if I made 12 on-time payments, the finance company would lower my rates, which didn't happen. What can I do to get a better interest rate?

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Answers. 4 helpful answers below.

  • by Andy Is Wicked Married to Penal Colony on February 13th, 2005

    Andy Is Wicked Married to Penal Colony

    Is there anything in your contract that states that 12 on time payments will lower your interest rate? If so, gather all your payment records together with your contrat and send it off to the finance company with a request that they honor the contract or your will take legal action. If you took the dealers word for this and have nothing in writing, you are most likely out of luck.

    What you can do is contact other financing companies, your bank or credit union, etc. and ask if they will refinance your car loan at a lower rate. I did this once a year after purchasing a car and the interest rate was reduced by 4 points as a result.

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  • by Anonymous on January 10th, 2007

    Anonymous

    What you are stating about a lower interest rate, was this in your written contract or did someone just tell you this in order for you to sign on the dotted line?

    You might have a defense, if its in the contract. if not, they just blew smoke your way.

    You are obligated to finish this loan till paid. finding another loan to pay this loan is going to keep you in debt till the wheels fall off the car.

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  • by WhyamIhere on December 26th, 2006

    WhyamIhere

    Refinance! depends on your credit though.

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  • by Anonymous on December 26th, 2006

    Anonymous

    Your auto dealer didnt lie. After 12 months of on time payments you could probably refinance your loan at a lower rate. Should you? That depends. The first years of a loan you pay mostly interest. If you look at your loan schedule you will see something like a 95% interest 5% principal split. If you delayed your first payment by 45 days or more your first payment and even the second may be all interest with nothing going towards the balance on your loan. If you refinance your loan you lose all time you spent building up paying your loan. After 12 months you may be at a 68% interest, 32% principal payment. This simply means that for every $100 you pay on your loan, $68 dollars go to the bank and $38 dollars goes towards paying down what you borrowed. After 1 year you may have paid 45% of the interest you will pay on this loan but only 5% of the principal to lower the loan itself. If you refinance you once again start out at the 95%/5% split. In my opinion all the money you spent on interest the first time is wasted. Consider it rent on the money you borrowed. Generally unless you are going from an outrageous 19-20%+ loan to someting more reasonable like 7-12% it is not worth it to refinance a car. On a house 2% can save you alot over 30 years. On a car loan you would be better serverd to take your lumps. Make double payments. Make a seperate payment each month for $50-$100 and note 'principal only' on it. This will actually lessen the interest you pay and finish your loan quicker. Refinancing will just 'rent' you your car for a longer period of time and if you decide to sell it you will be even more 'upside down' as the saying goes if you have refinanced a car loan.

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