Hey everybody! Brief storytime.
I had a rough time for like six years or so in a big city and didn't build much credit history. I moved to Florida, and needed a car, so I bought one through CarMax. Great warranty, rolled into the loan principal (significant fact). I love my car, and I can afford it.
Now, my credit has improved over the two years or so I've been here, and I get offers to re-fi. The rates are enviable at my credit score (around 3.0%-4.0%), versus the not-great rate I have now (10.1%). The issue is, my loan's balance is around $14k and my car's resale value is around $9k. This disposition is just a little too upside-down for creditors to seriously consider refinancing me, despite my rating.
So, is it worth it to make a lump-sum payment of about $3k to bring the loan closer "into balance" with the value of the car, and then to refinance at a much lower rate? I do expect to want to "trade up" from this car a couple of years before the loan is due, maybe two or three years from now, so I don't think that running out the clock on the loan and then having an asset of "not-quite-zero" value is the path for me.