Auto Loans

[ewtrw]

Hello board, I currently have a fico score of 587 eq and 581 tu. Using the estimator, i can bring these scores up about 65 points by paying cc debt. Now I am desperatly in the need for a new car. ONly problem is I still owe about 4500 on  my current vehicle(which has a blown motor now). WIll paying off the current loan or cc to help raise my scores best help me get a new car loan? Or should I pay half and half on both? Thanks for any advice in advance...

[AMotorist]

What I have been told by many loan officers and car finance people is that CC utilization is a killer. Deal with that first.

If you get your utilization down you will actually (as long as your income is OK and you have no collections/judgements/etc) qualify for a 2nd auto loan. So you will have something to drive while you figure out what to do with the other car.

With a ~580 score I was able to buy a brand new Mazda 3 even though I already had an open loan for a much more expensive car.

[ewtrw]

Thats the direction im leaning....paying off the cc debt first.....thanks....

[Revelate]

Auto loans and installment debt in general are tiny compared to credit card debt when it comes to FICO scoring.

Just be aware you may need a downpayment for the new loan so keep a cash reserve regardless. 20% of the car price is not unreasonable for a used vehicle.

[MovingForward_2012]

You can also trade your car in. You might get most of the money owed for the car and that would eliminate you from having two car payments.

I agree that getting your utilization down is most important. Try for at least 30%; however, it would be best to get it down to 10%.