Will trade-in boost score?

[loviedovie]

Hi all

I bought a newish car in August, have paid more than the payment amount monthly and have maybe 6k left on what I financed. But I'm not totally happy with the car and want to trade it back to the dealer for another model. I know I will lose a little money on the deal, but I am not that concerned about that. Just want to be happy with the car I drive every day since I have a long commute. 

My question is-  

This would I imagine, result in the existing loan slowing "paid, closed, never late" and a new loan being started for roughly the same amount, perhaps a little more.

Will this help my credit score due to a thin file and it now showing another paid loan?

Or will it hurt me because I am adding a new installment and all new credit is bad credit?

[pizzadude]

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@loviedovie wrote:

My question is-  

This would I imagine, result in the existing loan slowing "paid, closed, never late" and a new loan being started for roughly the same amount, perhaps a little more.

Will this help my credit score due to a thin file and it now showing another paid loan?

Or will it hurt me because I am adding a new installment and all new credit is bad credit?

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Correct, your current loan will show as paid / closed / never late.   It will remain on your credit reports for ~10 years from the date closed.

Any time you add a new tradeline to a thin file you are going to lower your average age of accounts ( AAoA ) which may lower your FICO score.

Adding a new installment loan isn't bad from a FICO perspective.    Using 99% of your available revolving credit would be considered bad though.

You won't see a score boost from closing your existing loan and taking out a new loan.   Your score may drop slightly depending on how much your AAoA is lowered.   Also you will incur inquiries which will slightly lower your FICO score.

[MovingForward_2012]

It will show the loan paid never late and the new loan will have the amount of the new car plus negative equity, which is the difference between trade in value and the remaining amount on the current loan. It might be better for you to lease if you want a new car every 3 years.

Getting a new loan typically hurts your score initially because you closed an account which affects your AAOA plus you have 1 or more new inquiries from the new loan. But the score rebounds in a few months given satisfactory payments.