Should I Refi my Motorcycle?

[Anonymous]

Funny question considering I only owe $3,000 on it, but work with me.

I got my loan for it last April for my motorcycle, and since it was before me really knowing much about interest rates and such back then, I got an 11.99% APR, despite my good credit score, and doing a 60 month loan.  Payments are $75/mo (I was smart enough to do a pretty big down payment)  My credit score back then was low 700s, my most recent FICO was from AMEX in August as 748 EX, and USAA 749 EQ.  The motorcycle loan was inq on EQ.

I've been debating doing a refinance with USAA, getting a new motorcycle loan to pay off the current one.  My thought process is, sure it will cost an inquiry, but having 2 paid off loans can only help my score, right?  I currently have more than enough to pay off the loan right now, but I want to save a bit more first as I like having extra cash in my checking account (seperate from my fully funded emergency fund, mind you).  Yes, it's costing me some interest, but it is what it is.

So, would getting a new loan to refinance the current one, then paying the new loan off in say, 3 months, help much with my score, or would it just be a waste of an inquiry?

[Revelate]

You might be able to re-fi down, it'd probably save you some money over the life of the loan that's left.

It's an awfully small amount left though, USAA puts their breakpoint on APR's at something like 15k loans, not sure how many lenders will want it, but someone will probably do it.  No clue on the APR though on such a small loan that's secured with the title.

[pizzadude]

IMO any positive impact to your FICO score of having two paid installment loans versus one paid installment loan will minimal. By the time you factor in a slight ding for the inquiries, I really don't see it doing anything significant for your score.

I would just pay off the loan, when you are in the market for a new set of wheels you will get a much better interest rate.

[Revelate]

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@pizzadude wrote:
IMO any positive impact to your FICO score of having two paid installment loans versus one paid installment loan will minimal. By the time you he a slight ding for the inquiries, I really don't see it doing anything significant for you.

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Heh, forgot to put that in my post, but I agree: 1 vs 2 paid installment loans in your situation is marginal at best.