Can you refinance a car you own outright?

WearyMicrobe

WearyMicrobe

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This is going to sound really dumb, but I found a truck, I have the cash to pay for it and I am going to do a simple bank transfer. I would like a loan but cannot get a loan straight off as its a private seller out of state and I have talked to a few banks. Can I refinance once I have paid for the whole thing and get my cash back.

Reasoning

I would like to have at least a small loan so I can keep something on my credit report as the only thing currently is the BMW and my wife's Beetle. The bank keep saying that because I have a low income to debt ratio, ~9% which I though was a good thing, that my score is suffering, I need a higher score so we can do a 15 year refinance at the top teir rates.

The other option is to just put the darn thing on my credit card and treat it like standard debt. This seems completely backwards to me right now. Secretly I like this idea because I can refinance and use the cash to do the blower faster but I really do need to get my score up.
 
Unless you have a very low interest rate on your credit card I wouldnt do that. I think if you refinance your current loan for cash back it will change youe loan type and raise the interest. I have looked into this lately and thats what I have found so far. My situation was different tho.
 
One of the strange things that seems counter intuitive is that a credit rating is just that...your rating at handling credit. If you don't have credit experience the score can be a little lower.

Take out a small signature loan...unsecured...and pay it off as agreed. It will cost you a little interest, but you are paying for an increased score, which will be of value in the future. If you want to soften the cost of the loan, put the amount borrowed in a CD and get interest on it, you won't get all of your interest out, but it will decrease your expense.

One other thing...and you unluckily got me to respond first...I just think that borrowing to modify is absolutely the wrong thing to do. But I am a fanatic...I also think that one of the habits we all need to break is financing autos. It is something that you will never escape unless you set your mind to do so...over a life time the future value of financing expense is tens if not hundreds of thousands of dollars. Pay your current vehicles off, and start saving to buy your next vehicles with cash. Once you have broken the habit...you will love the short term pain you had to endure to escape the monthly payments and the financing expense!

But I am an old fart and may be totally wrong...lets see what others have to say.
 
i was gonna say...i can here roy, now:D

i borrowed money unsecured from my local bank for years...one example, i borrowed for something very stupid, and didn't get it...(from overseas...save the jokes)...but i said to myself, hell, if i don't get it, then it'll at least help my credit report...so i didn't get it, paid the loan off early...good for me...and my credit...

if the ultimate goal is to use the "financing" for your benefit (not the bank's), then i see no reason not to do it, imo
 
Prof said:
One other thing...and you unluckily got me to respond first...I just think that borrowing to modify is absolutely the wrong thing to do. But I am a fanatic...I also think that one of the habits we all need to break is financing autos. It is something that you will never escape unless you set your mind to do so...over a life time the future value of financing expense is tens if not hundreds of thousands of dollars. Pay your current vehicles off, and start saving to buy your next vehicles with cash. Once you have broken the habit...you will love the short term pain you had to endure to escape the monthly payments and the financing expense!
Click to expand...

Just so we are one the same page I could pay in cash for the truck and the modifications. What I am concerned about is when we go to refi that my wife and I as a whole have a combined score that is high enough to get a decent rate because 1% difference on our Jumbo is a huge amount of money in the long run

If I can refi the truck after I get it, then pay it off quickly say 4-6 months, which would cost very little interest would that be enough to jump the score. I have a feeling that it is no because I have had loans on a bunch of cars over the years all paid off.

If it has to be an open line, maybe take the loan pay 50% of it off and stretch the payments out over say 72 months to get the full benefit to the score and not take a huge hit because 7-8% on the rest is not going to bother me and would be more then covered by the reduction in the home loan in the long run? Just throw the rest into the long term money market account and forget about it.

This is honestly weird, if they just published the formula's that they use out in the open I could simply calculate what I need to do. But I have a feeling that would not be in their favor.
 
yes you can do that. You just have to hand over the title and then get full coverage insurance. Not a bad way to boost credit rating. Thats how i got mine to a 730
 
The other thing is if you were to refi,How long would you need to make payments before it would do anything for you on your credit report? 6 months?12 months?? If you pay it off to quickly you may not gain any credit for it?? Just a thought.
 
Yellow venom said:
The other thing is if you were to refi,How long would you need to make payments before it would do anything for you on your credit report? 6 months?12 months?? If you pay it off to quickly you may not gain any credit for it?? Just a thought.
Click to expand...

That is why I wish they would just publish the stuff so I could figure it out. Right now its just a big black hole. Might take the path of least resistance and just finance it over 72 months with no money down and just set the thing to autopay from a savings account that I setup. Might get 2.5-3% which would cut the loss on interest down to about 3-5% on the money. Would cost me about 50$ a month but the score increase would wash that away in a month.

Or turn this one down and find one in state, but I have been looking for a while and have yet to see one RC on a dealer lot at a good price.

TNVIPER said:
Dont use your credit card to finance the truck....it could hurt your score at least in the short run...
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The question is will it, if I buy it then I have a open credit line being utilized it should make it go up. It's not like I am maxing the thing out. If I do a advance check on this card I only pay about 11.99% which on this little money is for maybe two three months is not bad. Plus I get the protection of paying with my card if anything in the deal goes wrong.
 
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what if you went to a credit union and opened a savings with the money for the truck and get a loan from the credit union and do what you said with an automatic withdraw. Once you open a savings your a member of the credit union. They are better for car loans then regular banks imo. Plus alot of them have excellent rates for used cars. Just tell them what your trying to do and they should be able to take car of you.
 
WearyMicrobe said:
The question is will it, if I buy it then I have a open credit line being utilized it should make it go up. It's not like I am maxing the thing out. If I do a advance check on this card I only pay about 11.99% which on this little money is for maybe two three months is not bad. Plus I get the protection of paying with my card if anything in the deal goes wrong.
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Credit cards help your score as long as you pay the balance each month....if you make payments it will lower your score..........plus 11.99% is extremely high.....you might try Capital One online application for car loans....you can use it to buy or get a loan on the truck after you buy....but dont apply to many places as credit checks will drive down your credit score..
 
Prof said:
........................
Pay your current vehicles off, and start saving to buy your next vehicles with cash. Once you have broken the habit...you will love the short term pain you had to endure to escape the monthly payments and the financing expense!

But I am an old fart and may be totally wrong...lets see what others have to say.
Click to expand...

Roy the DREAM KILLER!:mad:

Thanks Roy for wrecking my dream of having three car loans at the same time!

DAMN I want that Challenger SRT!:( :( :(

......SPEND today who knows about TOMORROW! :D
 
http://www.credit.com/calculators/score/

This is kind of cool lets you play around with the numbers. If it is correct then the number of auto loans really does not have that big off effect on the final score.

But it does not take total income into effect, I.E. I could only have 10K in open un-utilized credit and make 150K and have a low score. Or 60K in used credit and 150K income and the score would be higher as you would be supporting a higher debt load. Strange that that does not take income into effect, but I have seen it mentioned in a few other places. Mainly they use debt to income to keep you honest on what you can pay.

But if you carry 10% debt on the open credit you do have then you get a huge bump. Like 55 points for me, even though I keep my cards at 0% its the same as having around a 30-35% load according to the calculator.

They want you to use a bit of the total available but not enough for them to worry about getting paid back.

So theoretically the best way to do this, to max my score out is. Put about 4-5K on my 10 year old credit card at 11.99%, have it autopay off and pay the rest in cash out of hand. It gets me a huge bump in my credit because I will stay at the magic 10% limit. The 500$ or so I would pay on the card in interest over the next year until we refi would be offset 10-15X over per year on the loan of the house with the reduced rate with a score in the high 700's. Plus the debt to income will be incrementally better.

This seems really silly but it seems to make sense with the information I have been able to gather. It's all a mute point though as the seller did not agree to my offer. But at least I now have a game plan if this checks out.
 
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Having some debt is usally good (assuming it's getting paid ontime all the time) as Payment history is a big part of the score. If you're not making any payments on anything because you don't have any to make the score prob changes little if any, regardless of debt to avail. credit ratio. The higher the avail. credit you have helps the score if the avail. credit to debt ratio is in the right range. If you have payments and make them on time it helps raise the score. The longer the history you have of doing this the more it helps.
 
MYTRAM said:
Having some debt is usally good (assuming it's getting paid ontime all the time) as Payment history is a big part of the score. If you're not making any payments on anything because you don't have any to make the score prob changes little if any, regardless of debt to avail. credit ratio. The higher the avail. credit you have helps the score if the avail. credit to debt ratio is in the right range. If you have payments and make them on time it helps raise the score. The longer the history you have of doing this the more it helps.
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Yup, this is the essence of a "credit score"...

If you haven't responsibly handled credit over a period of time, your score may not be very high...it takes some time, and responsible action.
 
Stagethree said:
Roy the DREAM KILLER!:mad:

Thanks Roy for wrecking my dream of having three car loans at the same time!

DAMN I want that Challenger SRT!:( :( :(

......SPEND today who knows about TOMORROW! :D
Click to expand...


I know, I know...sorry...but if I didn't say something some people would go through life thinking that car payments were just a fact of life. They should not be. The only sacrifice is a little ego forbearance for a few years.

I have said it over and over...you are not what you own...most are much more than that!

So my daily driver is a 12 year old rat Volvo wagon...

(with over 300 hp, and makes Evo drivers shit in their pants, when the front wheels smoke!)
 
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