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Posted in Auto Loans
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Question By
TRoho

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Bike and truck on loan. Want to trade them in to get a reliable truck...thoughts.. what will happen
And help and insight is appreciated

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It's in the details....

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Every situation is different, but your credit score is a balance of good details vs negative details.  So any time you take a small negative in your score to improve the larger negative you actually gain a positive with the difference that just improves more over time if you meet your obligations as agreed.  However, if your current loans are reporting current payments, then you are likely already better off paying the interest of the current loan.

I should also point out that if you are closing two installment loans and replacing with another, the hit to your score will be harder to overcome (credit score point-wise) than it would be if you were closing multiple credit cards that dont close when they are paid off.  Meaning ther strategy above only works when you add more actual positives than you receive in negatives.  Since you lose the age of accounts in installment loans when they close, debt consolidation tends to work best for your score when you dont close accounts.

Top Contributor
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It depends on what your bike is worth compared to what is left on the loan and it depends on what your truck is worth compared to what you still owe on it. If your bike and truck are both worth more than what you owe then you are in a good position. If you owe more than what the bike and truck are worth, then you are in a poor position to do this as you would put yourself even further underwater.

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