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Posted in Auto Loans
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Question By
wrighthappyJake1

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Does refinancing my auto loan(to save money) negatively effect my credit score?

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Most likely, yes.

Helpful to 32 out of 33 people

When you refinance the lender is going to pull a credit report. This will result in another inquiry on your credit report. Some places will tell you it won't affect your credit score. This is completely false. Wether it be your 2nd inquiry or your 6th inquiry, it is still an inquiry & will add to whatever your total "hits" are, at that time. There are exceptions, however. For instance, one of my credit unions told me that if they pull a credit report, for whatever reason and a month later I request a loan of any type, or apply for a credit card, they will NOT pull a 2nd credit report. They will use the info obtained on the 1 pulled a month prior. They will do this for up to 3 months. After month 3, a new report will be pulled. I do not know who all offers that, but it is worth asking about if you are wanting to refinance with a lender you recently had pull your report, for whatever reason. I hope this made since. It's been a very long day & I'm pretty exhausted, so my wording probably isn't on point but wanted to respond to your inquiry. One other thing I'd like to mention....IF refinancing is going to allow you to make consistent, on-time payments, and that's something you forsee being a problem at your current rate, I would strongly recommend following through with the refinancing, regardless of whether or not you'll have an inquiry on your report. Your payment history is MUCH more important and will affect you for years to come. (You probably already knew this but I feel it's safe to say that some readers may not be aware of such a thing. I'm trying to help everyone out as much as possible.) Best of luck! 😊

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Helpful to 18 out of 19 people

I have a $25300.00 auto loan at 18% interest.I knew full well what i was getting into when i started the loan{bbva compass} as far as how much i was paying in interest,because my credit score was across the board 560 average.

i just figured i would get my credit score up and refinance to a lower percentage rate.

Well,6 months later and after opening 4 credit cards (Credit One,Matrix,Surge,Citi )and 2 installment loans (SECURED for $500.00 each one) using my neighborhood credit unions i finally hit the 620 range on my credit scores.

Applied for refinancing with Chase,BBVA,Bank of America,Road Loans,againg with BBVA over the phone,and a few others and nobody would refinance me...i got the feeling all wanted to keep me at a high interest rate.

i finally went to the credit union i had the secured loan with and they approved me at 6.9% interest rate with .01% being discounted for auto draft from their savings account(well i mean i had to open one with them of course).

I then paid off the installment loans and my score went down 25 points,but because i showed a new loan inquiry with my new best friend(credit union) my score went up 12 points.

I paid off 1 credit card to 0 from 288 and my score went down 12 points.

I maxed out another card using that money to pay down the principal on my car loan,had to do this in order to get credit union refinance loan,,car nada value $22,500.00...i owed to BBVA $24,337.00.By maxing out my credit card to $461.00 my credit score took a hit of 8 points.

After 6 months of paying $578.00 a month i paid in principal only $1356.00 the interest i paid was $2172.00. 

i now pay $422.00 a month (60 month new loan) which comes out to be $68.00 a month interest as apposed to $362.00 in interest to BBVA.......wow.wow.wow.wow     

It made my head spin thinking i really knew how much i was paying at first but didnt realize how much the bank was actually taking to line their pockets from the interest.

Anyhow ,i have a new best friend and thank BBVA for accepting me for a car loan to begin with....

Good credit does mean being in debt! i dont think thats bad ,,,,because your debt could be$20.00 on a $500.00 credit card. as long as you make on time payments,and keep a low utilization on credit cards then you will be rewarded with good credit scores.

i went to a bank with $1000.00 sat down and said ,Hey i want a secured loan,they did so in less than 15 minutes and yes i walked right back out the bank with my $1000.00  the interest i paid for that was $5.50 (to borrow my own money) but made my credit score go up.And remember that since i paid this loan off in 2 months it will show for the next 7 years as a paid installment loan with no late payments. Not a bad trade off for the $5.50 i paid in interest.

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First, do a little home work.

Helpful to 15 out of 16 people

Check with the lender on the original loan about early pay off.  many have fees associated with paying the loan off early in order tomake up for lost interest.  often, these fees will be more than you will save on a new loan. Also realize that the vehicle was used as collateral for that original loan, The blue book on that vehicle may not be high enough to use the car as collateral on a new loan if the new loan is for more than the current value of the car. 

as to the effect on your score, there will be a new inquiry on your report, a pay off of an older account and a new loan on your report, so initilally you will see a hit to your score,  lowering it for a few of months, once you start making the payments then your score should rebound back up.  not knowing what else is on your report, it's hard to guess what the over all effect will be in the long run.  

Good  luck

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Helpful to 3 out of 4 people

i have been out of my bankruptcy now for almost 2 years(2years in oct) i obtained a car loan before my bankruptcy was final. i didntr read the fine print and now im upside down in my loan. its a 2008 chrysler 300. i owe 16763..my payments arer 451 a month. ive had this car sinnce 2014 and all the money ive paid isnt doing jack.....she did a forberaance for 1 month for me ...big mistake..it made my balance higher. refinancing isnt an option cause most people only want up to 100,000 miles im at 136. is there any suggestions on what i can do to get rid of this car? i tried trading it in but all the inquiries killed me and still no one wanted to even put a dent in the 16,763 i owe. please anyone with any suggestions help

Reply by
kazetaro

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1 Person Helped
Helpful to 1 out of 3 people

Not sure of your income, but in the past I utilized the very high cash back options that gmc was offering. Because they have me 13000 cash back towards my purchase it went towards paying off my vehicle that was upside down. I still owed the full price on the Denali but it was brand new and I had a chance to keep the miles low and the value up. Food for thought!

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Helpful to 2 out of 2 people

Excuse me for this but,whoever you pay your monthly payment to is the entity that owns your car .

That said ,when you refinance the refinancer will send them a check for what you owe that in turn puts you on the hook with new refinance bank.

Did you mean to say that people you bought car from is no longer in business,if so it doesnt matter unless you paid them directly,and didnt get financed with a bank.

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Hard inquiries

How do you get these marks off your credit or how long does it take for these marks to come off?

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5 People Helped

Decrease you auto loan

Helpful to 5 out of 10 people

My score is 650 .  I own 15,500 on my car. If I make lump sum 2500, how will it affect my score?

Reply by
ricndal

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23 People Helped
Helpful to 3 out of 4 people

You will get a notification saying "Good job a creditor reported a lowered balance".

Thats what happened in my case,plus score went up 2 points....

Paid $3000.00 lump sum on $25k loan

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2 People Helped

Mz.d

Helpful to 2 out of 4 people

So, does everyone know or heard of daily interest?? Some banks will not tell you to split your payments in half. I was finances at 13.9%. I split my payments in half and ended up paying more towards principle. Capital one auto. I am sure if you paid split payments by your due date it would help pay more towards principle. Try and see. You can send savings to me lol...

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0 People Helped

Auto Refinancing for FIRST TIME BUYER

I am in desperate need to refinance my vehicle (as in removing a co-signer). September 14th 2016 will be a year of on time payments and the anniversary of me signing my first lease on a vehicle.

My Credit score is a little below 650, so my questions are, Is it smarter to go through a CREDIT UNION to refinance? How do I improve my credit score? Since this auto loan of $12,568 is the only thing on my credit report. And should I open a CREDIT CARD account to make myself seem more appealing to others?

The only thing I have in mind is to pick up a second job before I start inquiring about refinancing, so I am stable financially.

Top Contributor
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Helpful to 1 out of 1 people

Credit Unions do have lower interest rates.  You should open a credit card because lenders like to see a variety of credit.

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Helpful to 0 out of 1 people

What if you want to refinance your auto loan and can't located the original lender, due to the fact that the original lender business closed.

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