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Posted in Auto Loans
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Question By
ewhaywood2003

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Will refinancing my auto loan help boost my credit score?
I took out a loan for a car last year and totalled it. The insurance company and Drivetime paid off the loan and put me in a new car. My first car wont register as being paid off until I pay off my new one. So I'll have two paid off auto loans hit my credit at the same time, the catch being that if this new one gets reposessed, they both count as repossesions. If I refinance my current car with a 3rd party, would my credit be affected with 2 paid off auto loans? Will I still be able to put my mind at ease about this double edged sword deal I'm dealing with?

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Top Contributor
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the easy answer is don't let the car be

Reposessed! 

Your theory is good, but you need to do a little home work.  

Be sure that there aren't any "early pay off fees" or chargeson the current loan.  If there are, be sure you know what they are so you can include that in your financing and won't be hit with costs you hadn't planned on.  

Also when you refinance, go to your credit union or bank and talk to them face to face.  A human can distinguish what your trying to do (pay off the loans) and make decissions. Online lenders (computers) will see you trying to get a 3rd loan. It has to do with debt to income ratios. 

Of course, Having both loans showing has its benifit as well.  It shows as 2 auto loans being paid off on time. That can raise your score. 

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