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Avoiding family drama

noir_bloodnoir_blood Registered User regular
edited December 2010 in Help / Advice Forum
Three years ago my aunt and uncle helped me co sign a brand new car. I currently have about two years left on it and roughly 8,000 dollars.

Today, I got a call from my aunt telling me that both her's and my uncle's cars are starting to really break down, so they went to a dealer. They didn't really like the interest rate they were being offered(9-10 percent) and supposedly the dealer told them that having themselves removed off my contract would help. So they called me.

I don't have enough money to pay off the car outright, so the only option to have their names removed would be to refinance the car.

That just strikes me as an incredibly dumb idea though, and something that's going to cost me if I try. I have two years left on the car, with my current payments being 390 a month. My credit has gotten a lot better since then, but no one is going to refinance a car for two years, which means I would need to lenghten the contract. I really really don't want to do that.

I mean, would getting their name off the contract help them that much?

And more to the point, how do I go telling me I don't want to do it? I recognize that they helped me, and in fact have helped me a lot since I moved to their city, but I don't feel like I should have to sacrifice my finances.

noir_blood on
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  • EggyToastEggyToast Registered User regular
    edited December 2010
    You may want to talk to a bank first to see if you can get them to refi for 24 months. You might be surprised, especially if your credit has improved.

    And if the bank says "no, sorry," then you can simply tell your aunt & uncle what the bank says.

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  • AiouaAioua Novus Ordo Seclorum Lord of the ForumRegistered User regular
    edited December 2010
    Also, even if they won't refi for 24th months on paper, auto loans often don't have prepayment penaltes. So if there are no penalties, you just pay $whatever per month that'll have it paid off in 24 months, and just ignore the minimum.

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  • Count FunkulaCount Funkula Registered User
    edited December 2010
    Yep, I came in here to basically say what Aioua said. Refinance your car for whatever length the bank wants, then just pay off the loan within 2 years.

  • JebusUDJebusUD Registered User regular
    edited December 2010
    well, your aunt and uncle did you a favor by signing for this loan, so if you have to get a longer contract then that is what you have to do.

    Alternatively, depending on how much more it will cost you to refinance and extra interest, I would look into paying your aunt and uncle a certain amount every month. It might be cheaper overall and take less work.

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  • DruhimDruhim Registered User, ClubPA regular
    edited December 2010
    Some good advice on how to go about refinancing, and especially seconding Jebus that they did you a favor by co-signing, so it's pretty unreasonable to refuse to do this if it's going to hurt them financially in getting another vehicle. Pretty damn ungrateful of you.

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  • Inquisitor77Inquisitor77 a.k.a. Nubmonger, 2 x Penny Arcade Fight Club Champion Oakland, CARegistered User regular
    edited December 2010
    Also, they don't need to use the dealer's financing to buy a car, either. Credit unions and banks are perfectly happy to give people car loans as well, especially for long-time customers. I actually am a bit surprised that having your car on their books makes all that much difference, especially if it's being paid off (if anything, it makes them look better because they have more debt which has not been delinquent). Then again, with today's economy, no one really knows what's going on.,,

    There are other ways around this as well. If you have some money saved up, why not give them a really cheap loan so that they can increase their down payment, and thus pay less interest, on their own purchase. It's not ideal to have the money swap around like that, but unfortunately financial institutions have a great deal of leverage in these situations, and this is one of the ways it manifests itself.

    Also, I don't want to get into it in this thread, but you can't say that the OP is being "ungrateful" just for not wanting to increase his/her own payment. Both parties in the financial transaction have responsibilities, including his aunt/uncle not to place the OP in a situation of undue burden. There's a vast spectrum between paying a few hundred extra dollars to potentially losing the car (and all payments made) outright which needs to be weighed.

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  • ThanatosThanatos Registered User regular
    edited December 2010
    If you refinance, make sure there aren't early repayment penalties.

  • OnTheLastCastleOnTheLastCastle sometimes a boy just needs to get out of the house and meet some girls Registered User regular
    edited December 2010
    Thanatos wrote: »
    If you refinance, make sure there aren't early repayment penalties.

    They are THE DEVIL. Put up with a higher interest rate if you have to, but just plan to get it paid off ASAP.

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  • DeebaserDeebaser At the corporate garage sale This is cheap and plentifulRegistered User regular
    edited December 2010
    noir_blood wrote: »
    And more to the point, how do I go telling me I don't want to do it? I recognize that they helped me, and in fact have helped me a lot since I moved to their city, but I don't feel like I should have to sacrifice my finances.

    There is literally no way to do this without coming off as an ungrateful shit. It sounds like they hooked you up big time when you needed a car. They even cosigned for a NEW car, rather than let you languish within the limit of your actual credit rating. You owe them.

    Go down to your bank and explain the situation. It should be much easier for you to get a loan using 3/5s of your car as collateral.

  • Brainiac 8Brainiac 8 Registered User regular
    edited December 2010
    Most banks have no penalties for paying a loan off early...so if you refi the car for the extended term, keep paying extra on it until it's payed off in two years and you'll be good.

    Your family helped you out, return the favor and help them out.

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  • Modern ManModern Man Registered User regular
    edited December 2010
    If you can't find a bank to re-fi for 2 years, why not re-finance for a 4-year term? The actual term is irrelevant- you can still pay it off in 2 years if you want by making more than the required payment.

    I just re-fied my car to get a better rate. Even though I only had 2 years left on my original loan, I went with a 4-year loan on the re-fi but am still making payments with the goal of paying the car off in 2 years.

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  • DarkewolfeDarkewolfe Registered User regular
    edited December 2010
    What everyone else said. Find a contract with no pre-payment penalties and don't worry about the duration, pay it off in the same time frame. Even if the interest is higher and you end up spending an extra grand during the life of the loan, you need to return the favor to your family.

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  • DeebaserDeebaser At the corporate garage sale This is cheap and plentifulRegistered User regular
    edited December 2010
    Also want to add that having a family that is willing to co-sign a loan for you is HUGE. The risk that they expose themselves to is tremendous. I have pretty solid credit now, but my parents would never ever ever co-sign a loan or be a guarantor on an apartment for any of their children.

    My extended family would just LOL if that were ever brought up. Count your blessings and do right by your family.

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