Car Buying Advice - Buying with little down then refinancing

coreyb2003

Hi all,

I've only bought a few cars in my life and they've always been old and worn out. So the level of financing I'm looking to do is beyond my expertise.

I've had my eye on Subaru forrester or outbackk for a couple of years. My wife and I had been saving a little to have a significant down payment on one. Unfortunately two things have happened:

1) I wrecked my 10 year old car this weekend (swerving to miss a deer) and it is likely totaled.

2.) My wife and I are getting a divorce. We don't have a whole lot in savings right now because we just bought a house about 7 months ago. Since we are getting a divorce, we are selling the house and will likely make a significant amount on the house (in a few months).

My predicament is that I need a car now because mine is totaled. I'm temped to go ahead and buy a couple years old Subaru with $2k down (all we have in savings). Once our house sells, I'd like to put $10 or $12K toward that vehicle as I had originally planned to do. I'm curious about how avoid getting stuck with the high monthly payment on an auto loan knowing I won't have a lot down but I'll have the money in a few months after my house sell.

How does auto refinancing work in this situation? Could I put the $12K toward the principal in a few months and then refinance to get my payments down to a more manageable level? My credit score is great and I have a good job.

Help?

kyfdx

The problem is, probably the best rate you'll get is when you purchase the car. If you want to refinance a used car, you usually pay a higher interest rate.

If you only have $2000, you might be better off buying a beater. That way, you aren't counting on a big payday that might get delayed. When the money comes through, you can sell the beater, and buy what you want.

coreyb2003

I'm definitely considering that. I hate to waste the money on a beater. But if I can sell it for close to what I paid for it. It will be a wash i guess. I wasn't sure if the interest rates is typically anymore favorable when you refinance a used car. 

kyfdx

coreyb2003 said:

I'm definitely considering that. I hate to waste the money on a beater. But if I can sell it for close to what I paid for it. It will be a wash i guess. I wasn't sure if the interest rates is typically anymore favorable when you refinance a used car. 

They are typically less favorable.