Refinance Auto Loan

[Shannon27]

I have an auto loan with Navy Federal for 10.9% - I've had the car 8 months.  My local CU offered a refinance at 5.9%.  How will this effect my score?  I will be paying off one loan but opening another.  I am 2 years post BK and have re-established great credit but my score has been stuck at 683 for about a year.  I have 2 items left that fall off in 2026 andthen the BK that is there until 2030.  Trying to get into the 700's.

Thanks!

[FicoMike0]

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@Shannon27 wrote:

I have an auto loan with Navy Federal for 10.9% - I've had the car 8 months.  My local CU offered a refinance at 5.9%. Sounds like a great move. How will this effect my score? Who cares, finance ahead of fico.  I will be paying off one loan but opening another.  I am 2 years post BK and have re-established great credit but my score has been stuck at 683 for about a year.  I have 2 items left that fall off in 2026 andthen the BK that is there until 2030.  Trying to get into the 700's.

Thanks!

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[Shannon27]

Very true!  The 5% savings is worth it - especially since I plan on making larger payments  to pay it off faster!  

[Rogue46]

Yeah that's kind of a no brainer. Sure you will get nicked a few points but you'll be saving a ton of $$$. 

[FicoMike0]

That's even better! At least keep making the same payments, that will still pay it off earlier. 

[Realist]

The key to acquiring a large and thick credit profile, is applying for new loans when they make sense within your life.  This is one of those times if you can get the approval.   We can do all the right things with paying down debt, paying on time, etc, but if opportunity allows you to enhance your position and build profile weight, it's an excellent win.  

[pizzadude]

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@Shannon27 wrote:

I have an auto loan with Navy Federal for 10.9% - I've had the car 8 months.  My local CU offered a refinance at 5.9%.  How will this effect my score?  I will be paying off one loan but opening another.  I am 2 years post BK and have re-established great credit but my score has been stuck at 683 for about a year.  I have 2 items left that fall off in 2026 andthen the BK that is there until 2030.  Trying to get into the 700's.

Thanks!

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Agree with the others, refinancing is a good idea because you'll be saving hundreds or possibly thousands of dollars over the term of your loan with the lower interest rate.    In terms of increasing your FICO score, you're not going get a boost from refinancing, and in fact there may be a brief hit to your score from credit inquiries and if your old auto loan shows as paid before your new auto loan appears -- but you should quickly bounce back from any negative effects. 

[tithelady]

Would you mind me asking who is offering 5% on auto refinance. Ty. 

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@Shannon27 wrote:

I have an auto loan with Navy Federal for 10.9% - I've had the car 8 months.  My local CU offered a refinance at 5.9%.  How will this effect my score?  I will be paying off one loan but opening another.  I am 2 years post BK and have re-established great credit but my score has been stuck at 683 for about a year.  I have 2 items left that fall off in 2026 andthen the BK that is there until 2030.  Trying to get into the 700's.

Thanks!

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[Shannon27]

Greater Nevad Credit Union