Solve an argument - refinancing car loan AFTER making...

[dietpopstar]

...really large payment? If you're planning to refinance your car loan in a few months (at a MUCH lower interest rate) what is the logic in paying a large chunk of money NOW to the company that holds the high-interest loan at the moment?Seriously, I'm missing the logic here. Wouldn't it be smarter, if you have a chunk of money (which is equal to three high-interest rate car loan payments) why wouldn't you just make your normal payment for the next few months, refinance at the lower rate and THEN pay the big chunk of money?

[nevyn55025]

Paying the big-extra is better to do BEFORE the refinance. Then it will all go to the principal. Once you do the refinance all your fees are going to be based on the payoff of that balance. Also you will go back into the paying mostly interest phase of your new loan.

[hyabusawife]

I think it would be smarter to refinance the higher rate. Then use your large payment after you refinance. Otherwise, you are throwing your money away!!!

[JPR D]

Yes because as soon as you refinance, you start paying for the interest first and then the principal. It does not make any sense to give a huge payment unless you specified it to the principal and even if you did it this way refinancing is not always the best solution. Company always take your money and apply to the interest first.

[HELEN S]

Probably best to have a rest.looks like you can get some ideas here.http://carloan.featured-resources.in...n-payment.html