1. Have you checked out how much your payment would be ok to borrow the 16k needed to pay the car off
2. You essentially need to just pay down the loan on the car . Doesn't matter if you take the loan out or just put extra towards it . But, be warned that waiting until you hit equilibrium will take a while .

Fixed. Why gamble when the market might go up even higher? Also if the interest rate goes even lower, you can still refinance. No brainer.