Also, since my FICO scores were so terrible when I got approved for this loan, should I double up on the payments every other month like I was planning to do, or would it be better if I just paid the $446/month and just concentrate on paying down my cc debt, then try to refinance soon?
I would rather have had you say what you just said to me than to have seen your previous comment.
I am open to criticism, just make it constructive.
I need to hear the good and the bad.
I am TRYING to learn on this forum.
I plan on paying on time for around 12-18 months and then trying to refinance through my work associated credit union (which I just joined ) If I need to get rid of the car or trade it in, then that's what I will do.
I needed a reliable car and this was the best rate I could get with my scores.
I even posted a note at work looking for a car for sale. No one responded.
I had to get out of that rental car because my insurance was going to drop me without a current vehicle listed (I had sold my Toyota that didn't have a working engine and had to take it off my insurance policy.) I did not want to pay $20/day for insurance through the rental car company.
my .02 ...credit unions love auto loans under 10,000. Since you are planning on double payments (extra amounts go straight to principal) you are on a good track! You also want a higher FICO and I'm sure you are reading the credit 101 thread Find a good balance to improve both situations! Good luck!
You may want to get a copy of the schedule from whoever you got the loan from which shows what part of your payment is going toward principle and what is interest. Odds are not exactly in your favor even with 12 months of on time payments that your FICO will improve so that you can refi to a much better rate. Maybe 18-24 unless you trade in a 18% for a 13% (give or take). But if it does you want to keep an eye on the payoff value vs the book value. If you do not pay extra on that principle you will be upside down quick when you try to refi. If you are upside down no one will touch you for a refi. You also have to rememebr that they look at your overall credit picture. If you get one 30 late on anything in the next year you can forget about refiing. Get any credit card debt under control. Even if you have 12 months on time with the car but show large DTI ratios you are screwed.
Absolutely, positively I want to pay down my debt. I am awaiting all of my auto loan paperwork (payment details, etc)
so I am hoping that schedule you talked about is in that packet. If not, then I will call the lender and get a copy to watch it closely.
From what I have gathered on this forum, it sounds like on time payments for installment loans don't even factor into your FICO score until at least 6 months. Is that correct?
My goal is to have paid down my cc debt significantly within that 6 month period also, so maybe I can then concentrate more on the auto loan. I certainly DON'T want to be upside down on this loan. I know it is going to take some TIGHT budgeting, but I have a goal that I can focus on now.
What tends to be the prevailing thought among most aboards (including others then this) is that installment loans have very little impact on FICO in the short run. They have to play some role but mu guess is that are just weighted less. How you define short run is the unknown. I have seen posts that claim that they did not get real benefit until 24 months and in my case I saw no increase that I could contribute to an installment loan after 13 months so I just paid it off. All my other installments had fallen off due to aging so I decided to take a small loan to get another on my file. But I think that someone with sub-600 or so should more benefit. Honestly, your file is crawling with so much bad so any good should help you more then say someone sitting on 700 scores.
Actually, with your situation you can help others with lower scores by posting later what an installment loan did for you. It may give others a better line of sight of what to do or not to do.
Just don't sacrifice all that money for a used car for 20 FICO points. There are normally 2 things FICO is good for. Car and house. You have a car now and a house is way down the line. Focus on saving money for retirement so we can post all day long from the beach somewhere.
I plan to get in on Scorewatch to keep closer track of my ups and downs (hopefully more ups).
That way maybe I can notice what actually created the ups or downs (ie: decreasing cc balances, getting collections delected, on time payments, etc) and be able to somewhat confidently report that back on the boards.
I have read of a few people on these boards who have posted that they started where I am now and of the progress they have made, and it is encouraging. Although, I know it will take time and persistence.
I hope to be able to post something that encourages another to wake up out of their "credit coma" (as Silviatob says ) and get busy.