Hello all! It's been a while since I've posted, but now that it's a new year I'd love some advice for planning out what my next steps should be for refinancing my auto loan. Right now I'm gardening (3 months) and have no plans to open any new accounts, however I'd really like to refinance my auto loan to get that interest rate as low as I can. I was thinking of waiting until June, when I've past my one year mark and get my scores back up (they just started going back up after the loan hit my CR). My scores were actually higher before I applied for auto loans (EX - 767), but because my credit was too new (not enough history), I was denied by most of the banks my dealer pulled from and 5.99% was the best I could get (even when I applied on my own). I figured waiting a little while and showing a good payment history would go a long way in securing a better rate. Is that a good approach or does anyone have better suggestions? Should I wait longer or apply sooner?
Below is a summary of my 8 month credit history.
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May 2018:
- Applied for CapitalOne Platinum - approved for $300 SL
Aug. 2018:
- Applied for Auto Loan through Capital One Auto Navigator - denied
- Tried several other preapproval websites with no success
Sept. 2018:
- Applied for Discover IT Rewards - approved for $500 SL
Oct. 2018:
- Applied for Auto Loan through Capital One Auto Navigator - preapproved for $25k @ 9-10% for 60 months
- Joined DCU & applied for Auto Loan - approved for $25k @ ~7.5% for 65 months
- Applied for DCU Visa - approved for $5,000 SL
- Applied for Auto Loan through Mazda - approved for $19k @ 5.99% for 60 months (via Toyota Financial Services)
Nov. 2018:
- CapitalOne automatic CLI to $500
- First car payment
Jan 2019:
- Third car payment
- Scores bouncing back up (30+ pts)
- Auto CLI from Discover to $800
Current Fico 8 Scores (as of 1/10/19):
- EX - 729
- TU - 719
- EQ - 731
Other Info: No other debt except my auto loan. I PIF every month, so I don't carry any balances on my cards. Current reported utilization is 2.5%. No lates or derogatories.
@Anonymous wrote:Have you asked around your local credit unions in town? I refinanced my auto loan 30 days after I purchased it with my local credit union and my credit history too, was very new. I financed through Capital One using Auto Nav. myself but my interest rate was 12.84 but last Friday with a FICO 8 score of 652 I refinanced for 60 months at 4.75% I was going to garden mysel for several months before attempting to refinance but brand new cars loss a lot of value quickly so I took a chance with my credit union and it paid off big time. If I had your current scores I most likely would be down at the 1.99% rates but I'm happy with what they gave me considering I still have a repo on my report.
Thanks for the input. I don't think it ever occurred to me to refinance right away, but I hate the idea of paying more than I have to. I guess I'm more worried about the additional HPs without knowing if I would definitely save on my rate. Does anyone even offer rates that low (1.99%) right now? Looks like DCU offers as low as 4.24%.
I know my scores are decent, but apparently that doesn't matter as much when I have no history. Although, at the time I was applying, only Experian was generating a score (my credit was too new for EQ or TU to even generate one), so that may have also been a factor in my denials. I think I'll try the CapOne Auto Navigator to see what they would qualify me for, assuming that's also only a SP. If the rate is lower, then I might start shopping around.
@Anonymous wrote:FICO score isnt the only determining factor, FICO will help set rate, but loan to value ratio may determine if you qualify or not.
With your FICO scores, you definitely qualify for a better rate, if your ltv and other factors are in line. The easiest way is not to do
the work yourself in finding a lender and go to a broker who can find one for you. Try outsidefinancial.com, they are good with rates to 2.75%. If they do not get you what you need, post back here that it did not work and I can point you to a credit union that will work, I will need your city.
Also, people incorrectly think that refinancing an auto needs to be "the right time" or a "one time event" and that they should go back to their bank. I have been in auto finance for 27 years. I refinance regularly my house and cars when rates and terms make sense. I have never had a loan with my current back, because their programs arent the best. You can refinance as often as you want, as long as the cost and new terms make sense. You do need to watch credit inquireis, so you dont want to apply at lots of lenders all the time, but a couple inquiries every 6 months is not an issue, especially if it saves you money.
Thanks for the advice, @Anonymous. That is very good to know. I guess I only hesitate because of the number of inquiries - I don't want to look too risky, but I guess if they are close together, they'll all age off around the same time. I tried CapOne Auto Nav and I didn't prequalify. I'm guessing my LTV is too high, but I won't find out the reason until I get the letter in 1-2 weeks. How can I find out what my car is currently worth? I checked KBB, but they just give a range & two different types of values. I'd be ok paying more down so I can get the LTV down. Any suggestions on how to go about this?
@Anonymous wrote:Go over to https://www.nadaguides.com/ and when you choose your vehicle make sure your click on used. It will prompt you for the mileage and and options. This will give you idea of what the vehicle is worth. The Credit Union I refinanced with used the NADA listing, granted they have access to one that gives more precise information the basic one is pretty spot on too.
I input my vehicle, but I can't find where it says used. Because it's a 2018, I think it assumes I'm looking for new car pricing. Am I missing something?? My car is a 2018 Mazda3 Touring in Soul Red - 2,415 miles (excellent condition).
*EDIT* - If I go to the CPO section, I get the following values (not including the CPO added value):
- Avg Trade-in: $15,700
- Clean Trade-in: $16,650
- Clean Retail: $19,050
My loan buy out amount is like $18,600.
I already did that. I entered all of my information and it gave me new car pricing. Mines the 4 door though.