topic Re: My "loan-tracker"... in Auto Loans

My "loan-tracker"...

ScoreBooster — Fri, 10 Feb 2012 19:54:37 GMT

Hi folks,

This thread has the purpose of keeping you informed about my (hopefully successful) auto-loan refi-project.

Right now, I have a BK CH7 on file (filed 9/10, discharged 1/11) and two old auto-repos (both more than 5 years ago). After the repo, I obtained a car-loan from a buy here/pay here lot that fortunately reported to 2 of the 3 bureaus. I paid off that loan over 36 months - never late. Unfortunately (the month after it was paid off), the car died and last August, I had to get a new car. I purchased a CPOed Lincoln and my current loan-balance is at $21K. Since I wasn't prepared for that loan, my CCs were all maxed out when I applied - so I got stuck with an 18% interest-rate. I certainly paid every installment on time and on February 1st, I started my credit-preparations to get the best refi-loan possible.

My current Equifax-score is at 614 at a UTIL of 68%. I have six CCs. The first is an auto-repair account with a $1,000 CL that is already paid off. Altogether, the CCs have the following CLs:

$1,000

$700

$300

Once I'm done, every CC is going to report a $0 balance - except one of the $700 CCs which is going to report a balance of $60. I'll keep that balance below 9%. All updated balances should be reported by the end of the month. I'll apply for the refi-loan the first week of March (after a couple of inquiries will drop out of the 12 month window).

I'll keep you updated on my score-progress (I'll pull an updated FICO-report for TU and EQ the day before I apply). My goal is to at least cut my current interest-rate in half (9% or better). When I apply, there will be 59 payments left on my loan but I want to refi the balance over 36 months instead.

Re: My "loan-tracker"...

boomhower — Sat, 11 Feb 2012 04:18:45 GMT

Good luck!

Re: My "loan-tracker"...

ScoreBooster — Sat, 11 Feb 2012 04:58:13 GMT

@boomhower wrote:
Good luck!

Thanks!

I'll keep you guys updated. So far, the first of my $300 CL CCs had its closing-date and the first $0-Balance has already been reported to EX and EQ. No EQ score-alert from Score-watch yet..

Re: My "loan-tracker"...

webhopper — Sun, 12 Feb 2012 04:36:26 GMT

Good luck! I commend you for wantig the 36 month option. You should be able to do this if your income is there and if the car isn't too far underwater

Re: My "loan-tracker"...

ScoreBooster — Sun, 12 Feb 2012 19:58:24 GMT

@webhopper wrote:
Good luck! I commend you for wantig the 36 month option. You should be able to do this if your income is there and if the car isn't too far underwater

Thanks!

IF I'm able to get the interest-rate (about 9%) I'm asking for, my monthly payment won't be much higher than it is right now - although I'm reducing the loan-term by 23 months. That tells me a lot about the 18% I'm currently paying. Once on the new loan, I'm actually aiming at paying it off in 24 months. I do have the income for that as well - but I won't apply for a 24 month loan because that will scare some potential lenders, asking themselves if I can really pay that much. In addition, there is no interest-advantage in taking a 24 month loan over a 36 month loan. Both should have the same interest-rate. And finally, having a lower minimum-payment is always a good safety-net.

Hopefully, I'm not too much underwater. Fortunately, I purchased a CPOed car and not a brand new one, so the loss in value during my first months of ownership should be a bit less. And certainly, once I have the new loan and making payments aimed at a 24 month pay-off, it won't take long before any negative equity will be gone.

Re: My "loan-tracker"...

webhopper — Sun, 12 Feb 2012 18:28:52 GMT

Right! good choice, seems like you have a very responsible attitude about car loans. I hate that some people go for the 72 month option... Its like "really!"

I also buy gently used cars to cut down on initial depreciation, although for me, I don't go certified, I just go used, with warranty remaining. Seems like that has worked well for me in the past. Last car was a 2008 Volvo S40, bought for 19k in 2009. Paid off in 2011. it had 14k miles on it, and it still had warranty remaining. Still love that little red hot car and love the fact that its paid for!

Re: My "loan-tracker"...

ScoreBooster — Sun, 12 Feb 2012 19:56:25 GMT

The warranty was an important factor for me. Right now, this is the only car in our household. My previous car was much older and I had to swallow a $1K repair two months before it finally died. The additional repair to fix it would have been an additional $1K and that was when I decided that this old (MY2000) car simply didn't do it any more. I used the $1K as downpayment and traded in my old car for $3K - not bad for that oil-leaking thing.

Compared to the old ride, the new one is sooo MUCH better. And not having to deal with any pricey repairs for the next 3 years (or 50K miles) is giving me peace of mind, too. The only thing that bugs me is the current interest-rate - but I'm working on that..

The car I bought now was a bit too old to rely on the remaining factory warranty. As of today, it still is under factory warranty - but only for the next 1,200 miles..

Re: My "loan-tracker"...

Revelate — Mon, 13 Feb 2012 05:05:35 GMT

@webhopper wrote:
Right! good choice, seems like you have a very responsible attitude about car loans. I hate that some people go for the 72 month option... Its like "really!"

Only if there's a pre-payment penalty . Or if one just makes the minimum payment each time which I never suggest for a not-so-pretty APR auto loan.

Loan term didn't matter in my case (wound up with a 5 year one though, but no pre-payment penalty as required), as I am planning to refinance at the six month mark anyway... which I'd recommend to almost any sub-prime, "first-time" auto purchaser in a similar situation. Am estimating that at the six month mark my Auto-Enhanced penalty will be mostly nullified and will probably be looking at a gain of 50 points or thereabouts on the next pull.

Re: My "loan-tracker"...

Anonymous — Tue, 14 Feb 2012 17:49:51 GMT

Admittedly, DW and I have two 72 month auto loans both at 5.5 - 6%. However, we opt for this length for one reason, to give us a cushion. We always pay more than the minimum and all prior loans have always been paid off a year or two early with no problem. The longer term gives you that smaller payment and if something does come up, you aren't struggling to make a car payment (or two). It's worked for us. What surprised me is that when we financed my DW's car in October they asked if we wanted to go out to 84 or 96 months. Now that really seemed extreme to me....

Re: My "loan-tracker"...

Anonymous — Tue, 14 Feb 2012 18:44:36 GMT

@Anonymous wrote:
Admittedly, DW and I have two 72 month auto loans both at 5.5 - 6%. However, we opt for this length for one reason, to give us a cushion. We always pay more than the minimum and all prior loans have always been paid off a year or two early with no problem. The longer term gives you that smaller payment and if something does come up, you aren't struggling to make a car payment (or two). It's worked for us. What surprised me is that when we financed my DW's car in October they asked if we wanted to go out to 84 or 96 months. Now that really seemed extreme to me....

I agree with you.. I just paid off my 5 years car loan in 3 years.

Re: My "loan-tracker"...

ScoreBooster — Thu, 16 Feb 2012 05:25:14 GMT

Update:

I just got an Equifax Score Watch Alert. At utilization down to about 50% (from 68%, the first two $300 CCs are now reporting a $0 balance as well), my EQ FICO increased from 614 to 626.

Re: My "loan-tracker"...

Anonymous — Thu, 16 Feb 2012 06:49:01 GMT

Sweeeeeet!

Re: My "loan-tracker"...

ScoreBooster — Fri, 24 Feb 2012 01:04:03 GMT

Update:

The next $700-card reported $0 - EQ went up to 643.

Re: My "loan-tracker"...

ScoreBooster — Tue, 28 Feb 2012 05:17:11 GMT

Update:

Next $300-card reported $0 as well - EQ went up to 649.

That leaves one $700-CC which closed yesterday with a $57 statement-balance. They already reported to EX - let's see what this final CC is going to contribute once it updates on EQ and TU.

Re: My "loan-tracker"...

ScoreBooster — Thu, 01 Mar 2012 03:38:52 GMT

Ok, I've completed my journey! after all CCs have updated, my current scores are:

EX (FAKO): 659
EQ (FICO): 663
TU (FICO): 672

I'm quite satisfied with that. today, I went to lendingtree and applied for the Refi-loan. Capital One approved me at 12.09% interest. Not quite as good as I wanted (they used Experian and stated that my credit-score was 643), but MUCH better than the 18.24% I'm currently paying. I was aiming for 9% but I found out that the difference in interest between 9% and 12% are only $30/month at the beginning, getting less every month. I chose a 57 months term because the interest-rate was the same as it would have been for 36 months. However, I'm still going to pay off the loan over 24 months. I just picked this option as a safety-net.

Right now, I don't want to celebrate too early because they needed a paystub as proof of income which I already faxed in. In addition, I find it hard to believe that Capital One approved me although my last auto-loan with them ended as a repo where they lost more than $10K. So I guess I will know for sure in a couple of days if I'm REALLY approved. It was an interesting project and shows what you can accomplish with the right utilization. take my TU-score, for example: the only thing that changed since November 30th of last year was my CC utilization. The score went up from 575 to 672. I wouldn't be surprised to reach 700 in September - once my BK-filing has its second birthday. Amazing...

Re: My "loan-tracker"...

ScoreBooster — Thu, 15 Mar 2012 20:22:10 GMT

FINAL UPDATE:

Sooooo....I'm finally in the position to announce that my refi-project has been finalized.

After all, I did NOT take the offer from Capital One. I somehow had the feeling that I could get a better deal than the 12% interest they offered. Turned out I was right. When I applied over lendingtree, I received the message that I had a pending offer from Fleet Financial. I thought I'd give it a try and called them. They were able to get me approved through NuVision Federal Credit Union from California - and they offered 9.32%. Now THAT'S darn close to what my goal was!

The CSR from Fleet Financial did a great job and I could always reach him when I had a question.

Today, I received my paperwork from NuVision FCU and set up my online-access. Was pretty easy.

So after all, I think I can consider my mission "accomplished". From 18.24% to 9.32% interest does make a difference...

My loan was extended to 72 months (they simply did that on their own) and my minimum monthly payment changed from $547 to $394 - but as I said before, I'm planning on paying it off much, much faster..

Re: My "loan-tracker"...

ssghandless — Fri, 20 Jul 2012 16:20:14 GMT

Great News! How do you like Fleet Financail So far? My wife went through the same ordeal in financing but I co-signed. But now our credit is MUCH better and Now she wants to try to get an interest rate and loan on her own.