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I'm looking to refinance my car loan. However, it's 2012 and my car is a 2004. Bank after bank is refusing to even let me apply if my car is over 7 years old. Is it even possible or am I stuck with the high rate the dealer found for me when I had no credit?

ETA: I owe a little over $12k on a 2004 Chevy Impala at 14% APR

Yamikuronue
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  • It is not likely, but give us the numbers (amount of loan, current rate, type of vehicle) – mhoran_psprep Mar 17 '12 at 16:29
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    If you still have a loan outstanding after 8 years, you are more than likely upside-down on the loan: owing more than the car is worth. If you bought a used 2004 model car a year or two ago and the current loan is not that long-lived, it is still possible that you are upside down. It is possible, though not very easy, to get a loan on an older car, but the amounts that you can get will be much smaller than the retail value of the car, – Dilip Sarwate Mar 17 '12 at 16:54
  • @Dilip Sarwate: 1. Is it typical to have car loans for over 5+ years? 2. Is it a good decision? – f1StudentInUS Mar 17 '12 at 20:25
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    @f1StudentInUS It used to be that 3 years was the standard period for a car loan, but as prices went up, the loan period extended to 5 years. Many people are upside down towards the end of the period. Note that it is not quite as easy to assess the value of an old car; the blue book values are merely guidelines, and a bank wants to be sure that if it needs to re-possess the car and sell it, it will get its money back. If you can afford to get a three-year loan, it is far better than spreading out the payments over five years. – Dilip Sarwate Mar 17 '12 at 21:16
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    @f1StudentInUS See also this discussion where the OP has a (truck) loan of $30K to be paid off in seven years and it is in part responsible for him finding it difficult to do what he wants to do. To answer your question, I think that five-year car loans are a bad deal for the car owner. – Dilip Sarwate Mar 17 '12 at 21:29
  • @DilipSarwate I bought the car used less than six months ago with a 48-monthloan, intending to use the car until it falls apart and then have saved up cash to buy the next one. – Yamikuronue Mar 18 '12 at 17:55
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    If you can afford it, pay off the loan as quickly as you can. Read your loan agreement to see if there are prepayment penalties, and how they treat additional payments (usually badly if the dealer arranged the loan for you). Maybe once you have enough savings to afford it, pay off the loan in one lump sum. I doubt you can get a refinance of a loan on a 2004 model car. – Dilip Sarwate Mar 18 '12 at 18:01
  • @DilipSarwate haha how cute, you assume I have savings :( When I bought the car I was told my medical bills would be less than half of what they actually are ever week, so I'm trying to reduce my other bills so I don't run the book to 0 every month. I guess I'll just keep paying through the nose until we have two incomes again and then pay it off ASAP. – Yamikuronue Mar 19 '12 at 12:38
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    I am sorry that you have been ill and perhaps out of work as a result. You mentioned that you were saving money till you had accumulated enough to get another car, and so I suggested that you could use some of that to pay off the current loan early instead of having money in the bank but continuing to pay through the nose on your car loan. Your comments indicate that this is not the case. I hope you get better soon and resume your two-income family status. – Dilip Sarwate Mar 19 '12 at 13:03
  • @DilipSarwate Thanks. Yeah, in the next four years I ought to be able to start saving, but not in the short term at all – Yamikuronue Mar 19 '12 at 13:13
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    The real issue is that the black book value of a 2004 Impala (highest trim model) is about $7000. Unsurprisingly nobody will loan you $12,000 secured on it. – DJClayworth Mar 19 '12 at 17:29
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  • You bought a 7yr old car and took out a 4 yr loan on it, when it's highly likely that any car will die before it is 11. 2) You paid 12k for that car, which had a black book value of about 9k. 3) You took a 14% APR loan, the sort of APR that credit cards charge.
    • – DJClayworth Jul 26 '12 at 19:29
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    @DJClayworth Is continuing to chastise me really productive at this point? You've made your point. I was foolish and unworthy of even bothering to ask on this mighty site. Do you have a delorean I can borrow? No? Then I just have to keep moving forward from here. – Yamikuronue Jul 27 '12 at 11:28