Refinancing a car loan

[Mildred]

I’ve just refinanced my car loan, and I completely forgot that I was in the process of getting a mortgage. Will it hurt my chance to be approved, or hurt me in any other way?

Thanks

[Ted]

Yes, but only a bit

The average age of your credit affects your credit score. By refinancing you’ve made it younger, so your score may decrease. Not radically, but a little. It may effect the interest rate you’ll get on the mortgage.

Refinancing a car loan is a mistake. Car loans are short term loans. Too many people think that a lower monthly payment is a good thing. Actually, a longer contract means more interest payments over the loan, making it expensive instead of cheaper.

[Nolan]

Your agent should have warned you

I’m surprised that your mortgage broker didn’t advised you not to engage in any financial transactions (other than small purchases) until your loan is funded.

It may lower your score a little, so if it was marginal prior to the refinancing – it may harm you. Otherwise it won’t have adverse affect.

[Author]

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