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Lowering Interest Rate w/o Refinancing Under New Account?

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Valued Member

Lowering Interest Rate w/o Refinancing Under New Account?

So, I'm looking months into the future with this question, but I got to thinking about it today and I'd like to know what the plan should be come October of this year.

 

I got my first car loan in October 2017 at about $28k with a super high 18% interest! I had only about 9 months history with two secured cards (combined limit $2,200) and a $300 unsecured card that I had just gotten a few months prior in June. Plus, it was a used truck from 2009 which I think may have contributed to the high interest--but it's low miles (under 30k).

 

When I got it, I was advised to refinance with this October for a better interest rate. But, I've been saving up for a house and hope to purchase come 2019 summer. Will it be a bad decision to have just refinaced a car loan (closing a 1-year account and opening a new one) just a few months prior to applying for a mortgage? Will that look bad to lenders?

 

My Question: Is there a way to call the current lender (Chrysler Capital, if it matters) in October and neogotiate a lower interest rate without closing my current account and opening a new one?

 

Thanks!

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2 REPLIES
Frequent Contributor

Re: Lowering Interest Rate w/o Refinancing Under New Account?

 Possible, but I don't think many places will do it. Sets a bad presitent. 

 

With mortgages there are also other things to consider. What is your DTI with this car loan, versus your DTI after a refinance?  The benefits might outweigh the negatives. Also you don't have to wait for 1 year if your scores are drastically better.

 

also Will someone actually refinance a 1 year old loan for an old truck?  The LTV rate might be poor.

 

Finally,  start talking to a mortgage loan person.  They can let you know what is best with the car stuff.

Message 2 of 3
Valued Member

Re: Lowering Interest Rate w/o Refinancing Under New Account?

Thanks for the info! My scores are better, although they've been "Good" since the day I applied for this loan. But, my credit file is now a little more established with 12 months of credit card history (including 4 monthly payments on this loan).

 


@Kreewrote:

 Possible, but I don't think many places will do it. Sets a bad presitent. 

 

With mortgages there are also other things to consider. What is your DTI with this car loan, versus your DTI after a refinance?  The benefits might outweigh the negatives. Also you don't have to wait for 1 year if your scores are drastically better.

 

also Will someone actually refinance a 1 year old loan for an old truck?  The LTV rate might be poor.

 

Finally,  start talking to a mortgage loan person.  They can let you know what is best with the car stuff.

I was told by the finance manager at the dealership to wait at least 12 months, till October 2018. He said a year was ideal so I could build up my credit history more, and not drastically lower the "average age of accounts". 

 

My current DTI is 14%.

 

In reality, I would like to pay the loan off earlier, but that won't provide any savings because of how the loan is setup (and I would hate to have to pay it all off at an 18% interest rate). 

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