Trade-In

[Mr_Blak]

In July 2010 I bought a car that to this day Im still paying on. Because of my job, a truck would be better suited for me to drive. Will trading in a car that I still owe on affect my credit even though I'm rolling whatever difference into a new auto loan? I still owe 11k through Capital One.

[webhopper]

What is the trade in value of the car that you will be trading in?

Generally speaking, a car that is traded in will not have a negative impact to your credit scores.

[Mr_Blak]

The truck is used priced at 15k. I've been in great standing with my current loan, just wasnt sure how having a new loan would affect any scores.

[webhopper]

You will see a slight drop, due to shortening your AAoA, and picking up auto loan inquiries.... however, after 6 months your score should pretty much rebound.

Don't worry about your score unless you're planning on buying a house within the next year and a half.

[Dustink]

---

@Mr_Blak wrote:

The truck is used priced at 15k. I've been in great standing with my current loan, just wasnt sure how having a new loan would affect any scores.

---

How much is your trade in worth?

[Mr_Blak]

---

@Dustink wrote:

---

@Mr_Blak wrote:

The truck is used priced at 15k. I've been in great standing with my current loan, just wasnt sure how having a new loan would affect any scores.

---

How much is your trade in worth?

$6500

[Mr_Blak]

---

@webhopper wrote:

You will see a slight drop, due to shortening your AAoA, and picking up auto loan inquiries.... however, after 6 months your score should pretty much rebound.

Don't worry about your score unless you're planning on buying a house within the next year and a half.

---

I am planning on buying a house this year, possibly towards the end of the 3rd quarter. Should I hold off on the truck then? Current score is 654 (lately its been going up).

[Dustink]

Do you have a down payment?

It is not a good idea to roll negative equity into a loan. It is a hard to break cycle, because you will become more upside down with every vehicle. Put money down and get a short loan term.

[Mr_Blak]

---

@Dustink wrote:

Do you have a down payment?

It is not a good idea to roll negative equity into a loan. It is a hard to break cycle, because you will become more upside down with every vehicle. Put money down and get a short loan term.

---

No down payment, but I see what you're saying. Better off to at least cancel out the previous car loan with a downpayment, then to have it roll into the new loan, correct?

[Dustink]

Can you hang on to your car for a while? If you make large payments it will get paid down faster.

I think in an ideal world it would always be best to have a down payment that pays down the car that is being purchased. If you can't do that, then big monthly payments would be the second best option.

Worst case scenario is negative equity or no down payment and a long loan term.