Recently my financed vehicle with Navy Federal was totaled in an accident. Insurance paid them directly and the account is considered closed by Navy Federal. They have not notified the credit bureaus as of yet, and today they say it could be up to 30 days, since they just processed the payment. I've been driving rentals and loaners for over a month now. I travel about 45 minutes one way to get to work. I need a new vehicle asap.
Here's where it gets complicated.
After payment of old debts (pay for delete), I currently have an average credit history age of 1 year 4 months, which is bad for a 27 year old. I also have just under $20k in credit card balances due to around $8k in repairs to my truck and my wife's care, and due to my wife separating from the military, paying final costs and debts off from that and paying all the bills for the past 8 months. My wife is now in school with G.I. Bill BAH so we are working on paying everything off. Zero late or missed payments, almost always more than (usually 1.5-2x) the minimums, and my previous auto loan with them was opened for about a year with no late or missed payments either. Just paid off my two credit cards not with Navy Federal, been making payments on my Navy's Federal debt and I want to re-loan with them.
So the question is, what hurts me more in a credit decision, an extra $9k in open debt (always on time, no missed payments), or a closed auto loan that drops my average account age? The last time I paid off an open auto loan, it was my oldest account and my score dropped 80 points five or take. The trade off is this time I have high debt to income ratio and young account age, but no collections, no medical, no late or missed, history with them showing my credit worthiness, and I verified with them that their system shows that auto loan as paid in full and account closed, and the loan officer told me that they will definitely factor that in. So it's possible I can get the loan considered paid off and account closed without a negative mark on my credit report/worthiness.
Because of my previous experiences, I believe I should apply now. For one, my current loaner has to go back to its owner after this week, and i currently have no prospects as to my next loaner. I am okay with paying a higher APR for now until i establish the new loan and then I'll refi when my debts are down and my worthiness has improved, I also have around $5k in savings to be used towards my next vehicle. I intend on including sales and tax and licensing in my new loan so that $5k will be strictly used for making the monthly payments for the next two years, a partial loan payment guarantee if you will. I also have the vehicle I want lined up for purchase and it's honestly the deal of a life time right now.
Can anyone here drop some advice or new to me knowledge on this matter? At this point, I'm considering applying tomorrow morning, that way if they deny me or request more information, I can recon and I am confident that due to my positive payment history with Navy Federal and the fact that they carry literally all my open debt they will be willing to provide my new loan. My current income is $2,500 a month before my average of 25 hours of mandatory overtime each month. I feel that this is my best bet. I spend around $500 on average (20% DTI) for my credit card debt payments, though lately ive been paying more to put a big dent in the debt amount, and i havent used my cards except for once a month I buy a small item, strictly for activity purposes, we're talking <$5.00.
Please, educate me!
With a perfect paid auto, I'm sure NFCU will give you another loan. I'd speak to a loan officer and get pre-aproved and go from there.