How does refinancing an auto loan affect your credit?

[Anonymous]

Financially it makes sense save $50/month or more but is there a negative impact when the old loan is paid and new one established?

TIA.

[Loquat]

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@Anonymous wrote:

Financially it makes sense save $50/month or more but is there a negative impact when the old loan is paid and new one established?

TIA.

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Couple of things.  How long has the loan been open and how much longer is left on the current loan?  $50 a month savings can be significant especially is there is a lot of life left in the loan.  If the loan has been open for just a short while...less than a year or so, I can't imagine, unless your file is really thin, that you'd see much of a drop in score.

What it comes down to is what you think is best for your situation.  Speaking only for myself...if there is at least 12 months left in the loan and I could save that $600...I'd do it in a heart beat because $600 to me is signfiicant enough and my profile is stable enough at this point to handle whatever point loss that may be associated with it. 

Keep in mind, I'm not one for choosing FICO score over savings.  Scores, be it high or low is only temperary.  I can always optimize my score if need be...but the saving are real.  At this point in my life I won't be purchasing another home and lets be honest, obtaining 0% to low interest rates on auto loans isn't a high bar to hit.  Most can eek out 0% auto loans with scores in the high 600's.  So...with that being said, you have to decide what it's worth to you.  Best of luck in whatever you decide.

[Anonymous]

I refinanced 2 cars this week.

Daughters car with 42 payments left was 17.99 at Santander now 10.71.  From Capital One Pre-Approval to check's in mail within 3 hours.  This will be about a $50 savings per month.  Capital one pulled all 3 bureaus and took my lowest auto score and divided by 2 to come up with my score.  No kidding but they did pull all 3 and took lowest score.  

At same time I applied at DCU but they were slow to repsond.

I should have waited to see what they had to say but since I got the approval I went ahead and refinanced my car <$10K balance  from 7.9 to 4.49% at DCU smaller savings but heck $17 a month in my pocket is better than $17 a month in interest.

Dcu has my score much higher and only pulled Equifax.

Had I refinanced Santandar with DCU only I would have saved more money but the bird in the hand enticed me on Friday.  I could always refi again 6 months from now if it makes sense.  I was also doubtful of DCU since I was getting rejected for everything except my checking/savings account but now it was just shortly more than 2 years post discharge so what the heck let me give it 1 more try and was approved for Visa and car loan.

I also think it's good to build a very solid relationship with DCU banking 2 years, closed shared secure loan, savings, now Visa and car loan.  May make it easier when we apply for mortgage.

Anyway none of that really answers my true question which I poorly stated.

So I had 2 car loans with 15-18 or so payments made all on time.

Does closing those and replacing them with brand new loans help or hurt me.

I think that on one hand having 2 more paid in full loans is good.

I know the inquiries hurt just a little

I know the 2 new loans may affect AAoA

I know the old loans showed guessing 25% of loan paid where new loans will show 0% paid

Any ideas how this factors into my scoring?

I'll keep everyone posted as things appear and change on my reports.

I really love DCU but my tip is once you get the approval and upload the requested documents wait 24 hours then call in don't wait for someone to call you back.  Might be on hold for 30-60 minutes but from there it was quick.  Loan showing up already on my DCU.