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Should I try to roll over my remaining car loan into a new loan?

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Anonymous
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Should I try to roll over my remaining car loan into a new loan?

Let me explain my situation.

About a year and a half ago, I was able to finance my first vehicle through Carmax. A 2011 Honda Fit. After downpayment my loan was about $8500. Interest is 7.95%. The loan is directly from Carmax. Two weeks after I made the purchase, I was rear ended on the way home from work and my car was totaled. We both had insurance and the guys insurance paid for what the vehicle was worth (About $6000). The problem was that I did NOT have GAP insurance, which would have covered the remainder of the loan. I decided to put $4000 into the loan and keep the remainder $2000 into my savings (I currently have about $850 left as of today). My roomate has been letting me borrow his car since so I can get to and from work.

Since then, I've been paying off the remainder of my car loan at $300 a month, and now I currently just have under $1400 left on the loan. The goal is to have it completly paid off by the end of this year, so I can finance a new vehicle. However, I was wondering if it is possible to add the remainder of what is left on my existing loan, so I could finance a new vehicle now? Would that be a good idea? How would it impact my score? I have a FICO score of 770 at the time of this post.

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1 REPLY 1
SouthJamaica
Mega Contributor

Re: Should I try to roll over my remaining car loan into a new loan?


@Anonymous wrote:

Let me explain my situation.

About a year and a half ago, I was able to finance my first vehicle through Carmax. A 2011 Honda Fit. After downpayment my loan was about $8500. Interest is 7.95%. The loan is directly from Carmax. Two weeks after I made the purchase, I was rear ended on the way home from work and my car was totaled. We both had insurance and the guys insurance paid for what the vehicle was worth (About $6000). The problem was that I did NOT have GAP insurance, which would have covered the remainder of the loan. I decided to put $4000 into the loan and keep the remainder $2000 into my savings (I currently have about $850 left as of today). My roomate has been letting me borrow his car since so I can get to and from work.

Since then, I've been paying off the remainder of my car loan at $300 a month, and now I currently just have under $1400 left on the loan. The goal is to have it completly paid off by the end of this year, so I can finance a new vehicle. However, I was wondering if it is possible to add the remainder of what is left on my existing loan, so I could finance a new vehicle now? Would that be a good idea? How would it impact my score? I have a FICO score of 770 at the time of this post.


1. I don't think there's any way to get the proceeds from the new loan to go towards anything but the new car.

 

2. From a scoring perspective, you are better off paying out the old loan at as slow a pace as the loan terms allow. Once it gets paid off, your FICO 8 scores will lose some points.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

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