Re: I want to sell my car and get another car, Will it hurt my credit ? MORE INSIDE
05-21-2008 09:09 AM
Great advice! BTW $3.50 a gallon? I envy you... I paid $4.25 yesterday..
Well it won't change your credit mix. The new inq and new loan will be a slight hit but the overall affect 8-9 monhts from now should be minimal. IMHO if you don't complete the sale soon I would wait until after buying the home. You wan't no new debt in last 6 mo from when they pull credit which will be slighly before your purchase (if looking for pre-approval letter). So by mid June if you haven't bought it I would wait.
The change in loan amount doesn't matter. FICO doesn't care what total loan amount is just how much you have paid down and how long loan has been open, and how good payment histroy has been. In this case you are replacing a loan with ??? number of good payments and a balance of $19K and original balance of ??? with a loan that (by time you are buying house) will have 6 reported payments and a balance of $13-14K on $15K loan.
You likely are looking at an overall small hit to credit score by the time the broker pulls your credit in late Nov. How much that matters depends on you. If you are right on the bubble (say middle score 700) I would wait. Even a 1/4% higher rate on your house isn't worth it.
Lastly the net "savings" likely are not as much as you think. According to EPA you GTO has an avg MPG of 19 and the Yaris has a 32. Figure you drive 12K miles in year.
GTO = 631 gallons of gas
Yaris = 375 gallons of gas
Savings = 256 gallons
At $3.50 per gallon thats ~$900 saved per year.
HOWEVER to save $900 it will require rolling $3K in negative equity and losing about another $2.5-$3K in equity on Yaris (the Yaris is "worth" trade-in value = $9,700 in my zipcode but you are paying $12K). Add all that up plus the interest on a now longer loan (compare remaing mo on existing loan to total length of current loan).
Likely end results is not much of a savings even though it will "feel better" at the pump you will be paying more for longer on a car not worth as much.