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Refinancing Questions

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Anonymous
Not applicable

Refinancing Questions

Hey , so when i bought my first used car at the Honda dealership and only being 19 with only one credit card to my credit history i did not have much of an option to getting the best APR rate, but after a little over a year and a half of paying for my car. I think it is time to refinance it because at the time of buying my car I had new credit so i had gotten a 6.50 APR and now my credit has increased to around 750. But i just have one requestion about this process. I bought GAP insurance for my car at the time of the pruchasing of the vehicle. What is going to happen with that money i paid for that GAP insurance? I am looking at refinancing with Bank of America because they have been my bank since i was 16, are there any other banks you guys would sugguest i look into before making a final choice. Also, I would really appreicate it if you guys can help me by telling me which banks have a closing cost for this application process? I appreicate the help.

Message 1 of 6
5 REPLIES 5
fury1995
Valued Contributor

Re: Refinancing Questions

No bank should have a closing cost to refinance your loan. Your GAP Insurance will be partially refunded to you or your existing lender upon cancellation of iether the GAP Insurance or payoff of that account. You can re-purchase GAP Insurance via your new lender.

 

I would give Bank of America at least a chance at your business. Their rates are not the best (as a Credit Union might be) but they are the worst either. I wouldn't consider refinancing your loan for another long term if it were me as you will end up paying more in the long run even at a lower rate.

 

Since your goal is to lower your rate, you can shop around your applications without too much damage. FICO can tell what the purpose of multiple applications are for... as it should indicate the purpose in the inquiries (auto lending generally) and it's kind of expected you would have more than a single inquiry for seeking credit for installment loans such as auto loans or mortgages,

August 28, 2023 FICO 8

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August 28, 2023 FICO Auto 8

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Message 2 of 6
SamsungHDTV
Established Contributor

Re: Refinancing Questions


@Anonymous wrote:

Hey , so when i bought my first used car at the Honda dealership and only being 19 with only one credit card to my credit history i did not have much of an option to getting the best APR rate, but after a little over a year and a half of paying for my car. I think it is time to refinance it because at the time of buying my car I had new credit so i had gotten a 6.50 APR and now my credit has increased to around 750. But i just have one requestion about this process. I bought GAP insurance for my car at the time of the pruchasing of the vehicle. What is going to happen with that money i paid for that GAP insurance? I am looking at refinancing with Bank of America because they have been my bank since i was 16, are there any other banks you guys would sugguest i look into before making a final choice. Also, I would really appreicate it if you guys can help me by telling me which banks have a closing cost for this application process? I appreicate the help.


Your GAP insurance is already paid for in full and is included in the loan. Imagine buying a TV on a credit card from Best Buy. Best Buy already has their money, and you own the TV, but your paying the bank back for the money they fronted you for the TV. Call the insurance company that has your GAP contract and ask what is the process on switching lenders. They probably just need to update your file. I would recommend local credit unions over Bank of America.

Message 3 of 6
Anonymous
Not applicable

Re: Refinancing Questions

Ok. Now i have done a couple of inquiries for an auto refinance. Will the two week rule of doing inquiries converted into one inquiry be applied to the same rule as when purchasing a vehicle?

Message 4 of 6
MarineVietVet
Moderator Emeritus

Re: Refinancing Questions


@Anonymous wrote:

Ok. Now i have done a couple of inquiries for an auto refinance. Will the two week rule of doing inquiries converted into one inquiry be applied to the same rule as when purchasing a vehicle?


Yes it will.

Message 5 of 6
TRC_WA
Senior Contributor

Re: Refinancing Questions


@Anonymous wrote:

Ok. Now i have done a couple of inquiries for an auto refinance. Will the two week rule of doing inquiries converted into one inquiry be applied to the same rule as when purchasing a vehicle?


They count as 1 inquiry as far as FICO score goes... but you still see all the inquiries on your report.  They are not "converted" into just 1 inquiry.

 

I took 18 inquiries combined across the 3 CRA's when I bought my car in January... and received a few "too many inquiry denials" from potential auto lenders.  If I were to apply for any CC at this point I no doubt would get the same denial because a computer sees all the inquiries and denies the app...  recon and manual review would be an option though.

 

This scenario is exactly why I opened 4 new CC accounts in December instantly approved with 4 inquiries across the 3 CRA's... then bought the car in January.  I'd no doubt have had more difficulty and had to jump through manual recon hoops if I did it the other way around.

FICO8 current as of : ----- EQ: --- TU: --- EX: ---
Hard INQs last 12 months: EQ: 5 | TU: 7 | EX: 9
Verizon Visa $6500 Amex Delta Platinum $10,000 Care Credit $12,000
NFCU CashRewards $6000 Apple Card $2000 Best Buy $3500 Amazon $5000
NFCU auto loan (2022 Ford Bronco Sport Badlands - Cactus Gray) $44k new - balance $31k/6.94%
Total CL: $45,000 --- Total CC UTI: --% --- AAoA: 5.5 years --- Income: $200k
Last app: 11-30-23
Message 6 of 6
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