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Refinance Auto loan while Pre-approved

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Refinance Auto loan while Pre-approved

Back in July I was pre-approved for 250K and then dropped from my lender because my mid fico dropped from 611-587. Since then I paid off almost all my revolving debt and my mid score jumped to 661. I now obtained a pre-approval letter for 240K for 4.5%, I would like to shop around a little bit but was thinking if I refinance my $13K auto loan from 15.95% to a better rate that would help me get approved for a range in 275K. I have a monthly car payment of $317 and was thinking I can refi with NFCU. Is this a bad idea?

Message 1 of 4
3 REPLIES 3
Moderator Emerita

Re: Refinance Auto loan while Pre-approved

On your current approval, did the back end ratio affect the amount of the mortgage you could obtain? Check with your LO for sure. If it did, then it would be a good idea to refi your vehicle loan as long as the montly payment amount decreases. Won't help if the payment stay the same.

Message 2 of 4
Established Contributor

Re: Refinance Auto loan while Pre-approved

15.95 is a huge rate... refi would probably save a lot of money on the car loan.

However, new inq, new account, raised % balance on open installment loans, your somewhat borderline credit score is probably going to take a hit. I would do it, if you are ok worst case wait a few months for a bit of rebound.
Message 3 of 4
Valued Member

Re: Refinance Auto loan while Pre-approved

If it was me, I would Refi. That interest rate is very high. You are making someone wealthy paying that interest rate. Refi will lower the rate and payments.

 

Downside is it might lower your score. It might also stretch out the payment duration, which means paying collision and comprehensive insurance every month that much longer.

 

YMMV.

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