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Points loss from a new auto loan and how to lesson the impact?

Your FICO® Scores can impact your loan interest rates, terms, approvals and more.
Valued Contributor

Points loss from a new auto loan and how to lesson the impact?

It's been about 4 1/2 years since got my current auto loan. Roughly how many points do we lose for the loan (inquiry, new account and high balance to loan amount ratio) and are there any good ways to lesson the impact?  The only thing I can think of is if a person was going to have a downpayment that isn't required.  They could hold onto that money then apply it to the princial after they get the loan.  That would it wouldn't be hanging close to 100% for as long. 

Cap 1 - $23,000 / Lowe’s - $17,000 / Barclay Apple Rewards - $15,000 / Capital 1 - $15,000 / Walmart - $15,000
Cap 1 - $12,000 / PenFed - $10,000 / JC Penney - $10,000 / Discover IT - $9700 / Discover IT - $7500
NFCU - $7300 / Barclay Rewards - $5400 / DCU - $5,000 / Merrick - $2400 - Total - $154,300

EQ - 760 / TU - 801 / EX - 748
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Established Contributor

Re: Points loss from a new auto loan and how to lesson the impact?

I may have lost a few points for the inquiry on each - I secured financing prior to purchase. I just bought 2 vehicles recently. I actually saw a point increase from both added trade lines. As we all know every profile is different and yes I had a pre-existing installment loan before anyone goes there. LOL  Smiley Happy

Started 6/6/2018 EX - 588 ; EQ - 667 ; TU 575

Updated 12/2018


Message 2 of 6
Frequent Contributor

Re: Points loss from a new auto loan and how to lesson the impact?


@BrandonLane wrote:

I may have lost a few points for the inquiry on each - I secured financing prior to purchase. I just bought 2 vehicles recently. I actually saw a point increase from both added trade lines. As we all know every profile is different and yes I had a pre-existing installment loan before anyone goes there. LOL  Smiley Happy


I'm hoping that's what happens when my two new auto loans hit my reports. One has already been added and my EX FICO 8 dropped by 9 points. I had an existing auto loan that was paid off as part of these transactions. And I just refinanced a third to lower the APR, so there's lots of activity that could affect my scores, one way or another.

 

To the OP's question, I suspect the only way to lessen the impact of this kind of activity is to have a pretty thick file to begin with. A thick file to begin with tends to dampen any changes caused by inquiries, new accounts, and paid-off loans.

 

Message 3 of 6
Senior Contributor

Re: Points loss from a new auto loan and how to lesson the impact?

In my experience paying off a car loan drops my scores 15-20 points and adding a new car loan increases my scores 10 to 15 points. I do have a very thick file that goes back over 40 years (my oldest open account is 41 years old) which helps moderate any changes but having to open and active car loans have helped my scores over the years - every time I pay one off I lose point and if I replace the paid off car with a new car loan I recover those points (most recent example March 2016). 

Message 4 of 6
Valued Contributor

Re: Points loss from a new auto loan and how to lesson the impact?

I bought another car this week. Before I did that I paid my other car loan down to $2200 (origional was $25K). The loan for the new car is $28,300.  So instead of having one loan reporting 100%, I'll be at 57% for the two loans.  That will only last until the first loan is paid off in 6 months. The new one will still be over 90% so I'll probably lose some more points. 

Cap 1 - $23,000 / Lowe’s - $17,000 / Barclay Apple Rewards - $15,000 / Capital 1 - $15,000 / Walmart - $15,000
Cap 1 - $12,000 / PenFed - $10,000 / JC Penney - $10,000 / Discover IT - $9700 / Discover IT - $7500
NFCU - $7300 / Barclay Rewards - $5400 / DCU - $5,000 / Merrick - $2400 - Total - $154,300

EQ - 760 / TU - 801 / EX - 748
Message 5 of 6
Regular Contributor

Re: Points loss from a new auto loan and how to lesson the impact?

But it's good you have it overlapping too it won't cut you as bad when the points do drop and it may actually help your score too once the amount goes down I know having a vehicle paid after financing does look good when your information is being reviewed as well Smiley Happy

Starting Score: 537
Current Score: 725
Goal Score: 775


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