What's the best strategy?

[hikenc]

My wife is wanting to purchase a new vehicle in March.  We have $15,000 cash to pay down a few items and boost her scores.  Here's the scenario:

Her salary: $113,000 annual.  Been with the company 12+ years.  

Looking to purchase a new vehicle in the $35,000 range with best interest rate possible.  Looking at Subaru Outback or Honda CRV.  Purchase will be February or March 2021.

Questions:

1.  Based on the information below, would it be ok to go ahead and pay off the existing auto loan?

2.  Would it hurt her scores (Mid-700s) to do this?

3.  Would it be better to pay some on the camper and student loans to get UTI below 89%?

4.  Would you just wait and put the $15,000 towards the new vehicle purchase?

Revolving Accounts:  Paypal Credit - $0/$2,250

                                      Target - $0/$3,000

                                       Care Credit (AU) - $0/$12,000

                                       Cap1 Quicksilver - $100/$5300

Installment Accounts:  Navient (Student Loans) - Balance of $28676 - Original Amount $27,813 - 103.1% UTI - $174 Payment (Deferred)

                                         RV Loan - Balance of $29,904 - Original Amount $30,125 - 99.27% UTI - $293 Payment (4 Months Old)

                                         Auto Loan - Balance of $11,970 - Original Amount $33,698 - 35.52% UTI - $669 Payment (~$7000 trade value)

Any advise would be greatly appreciated!

[TheFIGuy]

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@hikenc wrote:

My wife is wanting to purchase a new vehicle in March.  We have $15,000 cash to pay down a few items and boost her scores.  Here's the scenario:

Her salary: $113,000 annual.  Been with the company 12+ years.  

Looking to purchase a new vehicle in the $35,000 range with best interest rate possible.  Looking at Subaru Outback or Honda CRV.  Purchase will be February or March 2021.

Questions:

1.  Based on the information below, would it be ok to go ahead and pay off the existing auto loan?

2.  Would it hurt her scores (Mid-700s) to do this?

3.  Would it be better to pay some on the camper and student loans to get UTI below 89%?

4.  Would you just wait and put the $15,000 towards the new vehicle purchase?

Revolving Accounts:  Paypal Credit - $0/$2,250

                                      Target - $0/$3,000

                                       Care Credit (AU) - $0/$12,000

                                       Cap1 Quicksilver - $100/$5300

Installment Accounts:  Navient (Student Loans) - Balance of $28676 - Original Amount $27,813 - 103.1% UTI - $174 Payment (Deferred)

                                         RV Loan - Balance of $29,904 - Original Amount $30,125 - 99.27% UTI - $293 Payment (4 Months Old)

                                         Auto Loan - Balance of $11,970 - Original Amount $33,698 - 35.52% UTI - $669 Payment (~$7000 trade value)

Any advise would be greatly appreciated!

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1. IMHO, yes, that would lower your DTI as well, which could help.

2. YEMV, but it shouldn't because the other installment accounts should suffice for the FICO mixed accounts section.

3. Cannot comfortably answer this question, sorry!

4. Sure, but it really depends on the APR% of that loan to me personally.

Questions:

1. Which banks/CU's are you looking at financing with? Maybe knowing that would help target exactly what those financial institutions are looking for and help get the best APR%.

Hopefully, this helped!

[hikenc]

Thanks for the reply!

The existing auto loan is 12.57% APR which is why we were thinking about paying it off.  

To answer your question, we don't really have a bank in mind.  She is hoping to get promotional financing at the best rate available, hopefully close to 0%.  Her current auto loan is with Capital One.  We anticipate her scores to be high 700s or low 800s once revolvers show $0 balance (I paid everything off except a low balance on one.)

[TheFIGuy]

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@hikenc wrote:

Thanks for the reply!

The existing auto loan is 12.57% APR which is why we were thinking about paying it off.  

To answer your question, we don't really have a bank in mind.  She is hoping to get promotional financing at the best rate available, hopefully close to 0%.  Her current auto loan is with Capital One.  We anticipate her scores to be high 700s or low 800s once revolvers show $0 balance (I paid everything off except a low balance on one.)

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IMHO, 12.57%, I would be paying off that auto-loan first myself.

Questions:

1. I know you want 0% financing, but I'm a redundancy man. Do you have any CUs with a relationship?
   • NFCU
   • PenFed
   • DCU
   • Etc.

Comments:

• I would do some extensive research in these forums regarding both the dealers you're looking into. See if you can find their particular tiers, FICO, and Auto enhanced FICO for approval.
• Please remember some dealers do not pull FICO 8 or 9 but instead AUTO enhanced FICO, which can be a completely different score altogether. I think you can find those scores via myFICO purchase or Experian purchase (those are the ones I know).
• Going through the dealer could result in her report being "shotgunned" out to multiple financial institutions. This is "suppose" to be counted as 1 (one) HP within FICO calculations but can adversely affect your credit card approvals in the future. Some FI's don't like seeing many HP's, and even a manual review could result in denial. The above is just something to be aware of and is YEMV.

I do not mean to muddy the waters more but like to make sure you can make the most informed decision! Her current mid-700's scores I'm assuming are FICO 8's and should yield good results. I just had a buddy lease a vehicle and they pulled EX FICO 8 for their decision. His EX FICO 8 score is 730 and he got their 2 credit. 

I know that really doesn't help because every FI is different.

[TheFIGuy]

I just remembered something, I don't know if this DP is valid anymore, but IIRC Subaru exclusively works with Chase Bank for their loans. So if you have an adverse history with Chase or an acquired company, that could negatively impact your approval odds.

[Kforce]

+ 1

Pay off the current car loan