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New car loan while old balance still shows

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Anonymous
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New car loan while old balance still shows

Helping my son with his credit. He has a thin file. New Discover & low limit Cap 1. He does have a joint car loan with his dad that was just paid off but obviously Wells Fargo hasn't updated on his reports. He is in dire need of a vehicle --on his own credit. I'm wondering how he could be approved showing a $2200.00 balance whereas in reality it's 0. I know car dealers will run a lot of HPs to acquire a loan. Any information out there please?
8 REPLIES 8
Kree
Established Contributor

Re: New car loan while old balance still shows

Not only can he be approved showing a balance on an existing loan, but he will be more likely to be approved.

 

Credit scores go down if you do not have a open installment loan such as a car loan.  A 90% paid off installment loan can be worth up to 80 points on a report.

 

I would recommend that your son goes to a local credit union for an auto loan. He will likely get financing as good or better than what is offered through a dealership, without worrying about multiple inquiries.

Message 2 of 9
Anonymous
Not applicable

Re: New car loan while old balance still shows

Thank you! He is established at a local credit union & has had 2 loans with them. He did become 30 days late almost 7 years ago due to a major illness but it was the only late. I do feel going in person with recent reports may help . Also the used car rate is 3.9% Having a set approved amount would indeed eliminate stress.
Message 3 of 9
Anonymous
Not applicable

Re: New car loan while old balance still shows

A dealer will also be able to pull a payoff from WF if needed to show it is PIF. There might be a stip to trade or show paif off. That is no issue to overcome as long as it is taken care of. Some lenders also have a little room to overlook smaller balances on current units. Should be no issue having him get his own approval. Assuming there is an approval there. 

Message 4 of 9
Anonymous
Not applicable

Re: New car loan while old balance still shows

It should not be an issue if the old balance still shows in the report. Sometimes in some cases, the score gets better if there is a loan balance. 

 

https://www.hotpersonalfinance.com/category/credit/

 

Message 5 of 9
RobertEG
Legendary Contributor

Re: New car loan while old balance still shows

If he goes to the credit union for a loan, he will get personal attention.

They can easily and routinely call the paid creditor and confirm that the other loan is paid, notwithstanding lack of update on his credit report.

 

If he otherwise qualifies with the credit union, and the only issue is having a high debt to income ratio based on the other loan, they can update based on confirmation that it is now paid.

Message 6 of 9
Anonymous
Not applicable

Re: New car loan while old balance still shows

As other's have already mentioned, the lender will stipulate for proof of trade or proof of auto loan paid in full if his credit does not support a second auto loan. A lien release showing that Well's Fargo has been paid in full and no longer has a security interest in the vehicle that is paid off will suffice. As other's have already mentioned, a CU would definately be the best route as he can speak to a loan officer himself and explain the situation.

 

 

Message 7 of 9
Anonymous
Not applicable

Re: New car loan while old balance still shows

When you apply anywhere they are going to pull up the credit report and ask you about the current car loan. Just tell them you just paid it off and they will call the lender and verify. Kind of a routine thing.

Message 8 of 9
Dalmus
Valued Contributor

Re: New car loan while old balance still shows

Not to mention a huge chunk auto loans are issued to people who are trading in existing vehicles that still have a loan on them.

 

As everyone has said, shouldn't be a problem at all, but unless he's looking at a new car with manufacturer financing deals, a CU will probably be the best choice to get a loan from.

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Message 9 of 9
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