When to refi?

[Anonymous]

Hi, I'm new and have been lurking for a while, gotten some great tips from everyone here! I recently financed a car, after a truly mortifying experience finding financing. I have 3 cc's, each with a $500 limit, a few medical collections waiting to fall off (including one I'm disputing) and 'limited credit experience'. Got denied almost everywhere I went. I did find a CU for financing, but was approved for 15.75%. It was either that or Honda at 20something%. I was told refinancing in 8-12 months was the way to go but was wondering if it's possible sooner, maybe in the 6 month range? I plan on paying extra each month towards my loan because I know it goes directly towards the principal.

Also, how long does it take for the lender inquiries to fall off?

Thanks!

[Anonymous]

The inquiries fall off after two years but stop affecting the score after one year.

I wonder how much of a difference two months make? I refi'ed after 8 months because that happened to be when a loan sale was going on and I could get a great rate. Maybe you could talk to someone at the CU in 6 months. Bring a credit report/scores and ask if they will refi and what rate you would get, without having them pull your score so you won't be dinged if they can't help.

[Anonymous]

I refinanced after 6 months.  I went from 10.35 to 4.15 after six months and reduced the total amount of the loan by $8,500 (that's the excess interest I would have paid).  IMO, the savings was worth the 3-5 points my score temporarily suffered shopping for interest rates.  I recovered those points by lowering my cc utilization.

Every transaction is going to be different.  I was upside down on my loan and had to pay down the difference to refinance.  For me, the savings in the total cost of the loan was the motivating factor.  I also reduced the monthly payment and the term of the loan (by six months).