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New Contributor
Posts: 57
Registered: ‎06-13-2011
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Which one first: consolidation loan or auto loan?

[ Edited ]

If I consolidate some high interest loans (which would drop my monthly payment by $200), how would that affect an auto loan in the near-future? (Like within 3 months of getting the consol. loan)

 

I'm sure the lower monthly payment obligations would look better, BUT would it raise a red flag that I recently opened a new loan?

Regular Contributor
Posts: 154
Registered: ‎09-21-2012
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Re: Which one first: consolidation loan or auto loan?


rross wrote:

If I consolidate some high interest loans (which would drop my monthly payment by $200), how would that affect an auto loan in the near-future? (Like within 3 months of getting the consol. loan)

 

I'm sure the lower monthly payment obligations would look better, BUT would it raise a red flag that I recently opened a new loan?


It will lower your DTI ratio, thereby increasing the amount you can be loaned, however the new loan will lower your AAoA and decrease your credit score.

Age: 22 //Cards: Chase Freedom, Chase Amazon Visa, Discover IT, CreditOne, CapOne Quicksilver, CapOne Cash, Walmart, Barclaycard, Citibank BestBuy, NavyFederal Visa Signature cashRewards //AAoA: 1 Year 3 Months (but going down quickly Smiley Tongue) //CK:692, Sesame:656
Super Contributor
Posts: 9,674
Registered: ‎01-28-2010
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Re: Which one first: consolidation loan or auto loan?


rross wrote:

If I consolidate some high interest loans (which would drop my monthly payment by $200), how would that affect an auto loan in the near-future? (Like within 3 months of getting the consol. loan)

 

I'm sure the lower monthly payment obligations would look better, BUT would it raise a red flag that I recently opened a new loan?


Also you need to be careful in terms of how the loans are affecting your revolving utilization.    Are they reporting as installment loans or revolving ?     You don't want to drastically increase your revolving utilization as it could negatively impact your FICO score.

 

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Valued Contributor
Posts: 1,228
Registered: ‎05-10-2012
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Re: Which one first: consolidation loan or auto loan?

Also need to know what your scores are at, what kind of loans are being consolidated, where you're getting the consolidation loan, etc.

  • Current: EQ FICO 706, TU FICO 701, EX FICO 706 | Starting Score: 525 (05/2012)
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  • Inquiries (12 Months): EQ 2 TU 1 EX 1 | Most Recent: 1/21/2014
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