I have a 2nd toy car that I have a loan on, but am equitable in. A property came up just a few houses down from my current rental and I think I can buy it right, but I don't have the cash for the down payment at the moment. (Big tax bill last year & engagment ring purchase. My lender wants to see 15% down and I have that amount in my 2nd car.
Thoughts on approaching my credit union that has the car note, applying for a loan that is higher than the payoff, but still less than the actual value to get the cash out of it and use for the rental property down payment?
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
7y
@Justin Reid Let me get this straight. You don't have money for an investment because you owe too much on a "toy car" (I'm not even sure what that means), you owe back taxes, and you just bought an engagement ring? You need to get control of your current debt before you worry about taking out another loan. Sell the car, downsize the ring, pay off taxes, and start over.
I have a 2nd toy car that I have a loan on, but am equitable in. A property came up just a few houses down from my current rental and I think I can buy it right, but I don't have the cash for the down payment at the moment. (Big tax bill last year & engagment ring purchase. My lender wants to see 15% down and I have that amount in my 2nd car.
Thoughts on approaching my credit union that has the car note, applying for a loan that is higher than the payoff, but still less than the actual value to get the cash out of it and use for the rental property down payment?
Yes credit unions refinance cars all the time. Your interest rate will probably be higher as rates have gone up the last 18 m for car loans. If your payment goes up it might affect your dti ratio, but that is not a big deal unless it is already high. I say go for it, and use the cashflow to pay the car off.
Cedar Falls, IA · Member since 2017 · 32 posts · 13 votes
7y
Ugh...you're getting a lot of people that want to throw in their unsolicited 2 cents without answering your question. Yes, you can get a loan against a paid off vehicle then use those funds for RE investing. I know, because I've done it a couple times. The rate I can get on a newer used car loan is pretty much in line with what I can get on a HE loan. Just make sure the increase in monthly payments for your new loan will not push your DTI to high to get approved. Most recently, I took out a loan on my wife's paid off vehicle to cover that last $25k on a flip when I went over budget. I'll pay that back when I refi.