Like many of you, I expect to see lower interest rates in the future, and I hope to take out a personal loan to pay off an existing loan.
Existing loan: $47,910.09 @ 14.24@ variable $1733/mo 2y9m to go. Payment will be made automatically on 9/5/2024.
Creditor: Farmers Insurance Group FCU (I'm a Farmers Agent).
FIGFCU offers a personal loan with rates "as low as" 10.24% borrow up to $40,000 terms up to 60 months.
PV = $47,910.09 n = 4 i% = 14.24%/12 FV = -40999.60 PMT = -1773 so I figure in 4 more payments (or about mid December) I could borrow $40k at whatever interest rate is offered (presumably their rates will be lower in the future). Need a 740+ to qualify for the loan. FIGFCU always pulls Experían. Current Exp Fico 751.
But their FICO pull is always 5-25 points lower than what I show on the Experían App.
Why don't I score better? The #1 reason given is that I owe too much on revolving tradelines.
Here's my situation:
UCCU 57.6% Utilization (this is my lowest rated card at 12% APR).
NW Preferred 0% Utilization (this is my second lowest at 12.25% APR and a $25,000 line of credit accessible by transfer).
BMO Harris 50.2% Utilization on a BT scheduled to be paid off in 7 payments. 0% APR
Discover It Chrome 34.4% Utilization on a BT scheduled to be paid off in 7 payments 0% APR
Citi Custom Cash 28.6% Utilization on a BT scheduled to be paid off in 4 payments 0% APR
Chase Freedom 27% Utilization scheduled to be paid off in 5 payments. 0% APR
SSFCU 25.1% Utilization - 16.7% APR I plan to pay this off on or about 9/25/2024 probably by tapping the NW Preferred line of credit. I had to have my clutch redone. Long story.
Vantage West 5.7% Utilization. I plan to stop using this card entirely around 10/1/2024.
WF Active Cash 5.6% this spiked up because I made a car insurance payment on it. Should subside momentarily.
Mountain America CU 0% Usage
Barclaycard 0% Usage
Commerce 0% Usage
PenFed 0% Usage
FNBO 0% Usage
Bank of America Signature 0% Usage
Wells Fargo Autograph 0% Usage
Discover It 0% Usage
Bread Amex 0% usage but I'm starting to really like this card because of the 2% cash back. I may use it soon.
Synchrony MC 0% Usage — did they up my credit limit? My spreadsheet shows $8000 but their website shows $10,200. I'm going to call them...
CU West MC 0% Usage
Expect to have 4 inquiries in Mid December with Experian.
Newest account opened 8/2024 — Car Loan $9,080.45 @ 7.49% payments $220.18 / mo.
How do I reconfigure to maximize installment loan FICO by Mid-December?
I can take out $7,000 from NW Preferred and be at 28% and I can pay down each of those cards to 28% utilization with $4,956.44 so I'm good. Thanks for the advice.
@pizzadude wrote:Your goal is to payoff the $47K loan with a new loan & lower interest, is that correct ?
Have you run the numbers to see how much additional interest you'd be paying on the old loan versus taking out a new loan ?
Also your current loan is variable interest, so isn't it possible your rate would decrease on this also, assuming rates are heading lower?
The goal is to payoff the $47K loan with a new loan, ideally at lower interest rates, and a lower monthly payment.
Presumably the "as low as" number will also decrease when interest rates adjust.
Yes, the existing loan, which adjusted higher a while ago, will certainly adjust down. However, the monthly payment would not change, so there would be no change in my debt-to-income ratio.