[kraft.wagen]

Originally Posted by Technocrat

Option A - Refinance at a lower rate from a CU. In this case I think I might have to some extra money to close from my current provider, right?

Option B - Pay it off much earlier than the loan period(5 years) by paying large amounts say every quarter or may be like half this year & half next year.

It takes a few months for your credit score to improve. I'd say to hold on to the current loan for about 6m-1yr and then look for the CU. I think DCU offers the best rate so far on used cars. I would go for this option.

In option B, though you pay off earlier than the loan period, the interest is calculated for the period you have taken the loan for. The % interest amount is collected during the initial pay-offs.

[aah78]

Originally Posted by Technocrat

Guys i have loan question, I usually try to avoid loan & one of the main reason behind getting one for the MDX was improving the credit score.

Now, as it was my first loan & also a 2nd hand car my interest rate is high (3.99%), as I see I have following options

Option A - Refinance at a lower rate from a CU. In this case I think I might have to some extra money to close from my current provider, right?

Option B - Pay it off much earlier than the loan period(5 years) by paying large amounts say every quarter or may be like half this year & half next year.

Tech, I'll agree with kraft.wagen & say hold on to the loan for a while.
After a year, if you wish, refinance to see if you get a better deal.

Pay additional principal each month, or pay a larger amount every couple of months. This will bring down interest.
e.g. Say, if your monthly payment is $200, then either pay $50 or $100 more (whatever you can) every month to the principal, or every few months pay $400 additionally.

Does your loan have prepayment penalty?

[Technocrat]

Originally Posted by kraft.wagen

It takes a few months for your credit score to improve. I'd say to hold on to the current loan for about 6m-1yr and then look for the CU.
In option B, though you pay off earlier than the loan period, the interest is calculated for the period you have taken the loan for. The % interest amount is collected during the initial pay-offs.

Thanks, that's what I thought i.e. it would take some time for my credit score to improve.

And yes its the chicken and egg situation, if I pay now i dont get benefits of loan & if I pay off later then I would have already paid sizable interest & wont save much by paying early :|

Originally Posted by aah78

Tech, I'll agree with kraft.wagen & say hold on to the loan for a while.
After a year, if you wish, refinance to see if you get a better deal.

Pay additional principal each month, or pay a larger amount every couple of months. This will bring down interest.
e.g. Say, if your monthly payment is $200, then either pay $50 or $100 more (whatever you can) every month to the principal, or every few months pay $400 additionally.

Does your loan have prepayment penalty?

Sounds good, I just checked, no penalty I can make payments directly against Principal. So doing this wont affect my credit scoring, right?

So looks like I should hold on till atleast first year & in the meanwhile keep regular payments against principal so that I pay less interest overall.

Thanks guys

[vineethvazhayil]

Originally Posted by DieselAddikt

Thank you for that update on warranty. And yes, I meant GM warranty. Sorry I typed Chevy.

I am a little biased towards the Germans though.

GM and German - I'm reintroducing a suggestion - try the Buick Regal - it is an Opel under the skin, and hence German. You might like it quite a bit. Had one on rent recently. Nice car.

Originally Posted by aah78

A Lexus IS or GS is what you're looking for - yes, it'll handle a little better than your friend's Buick.

For the lowest cost of ownership, without doubt, are the Lexus IS and GS in their segments.

Originally Posted by Technocrat

Sounds good, I just checked, no penalty I can make payments directly against Principal. So doing this wont affect my credit scoring, right?

So looks like I should hold on till atleast first year & in the meanwhile keep regular payments against principal so that I pay less interest overall.

Thanks guys

I think it won't impact your score - as long as you are paying your regular payments, the score remains intact or better.

[maddy42]

Originally Posted by Technocrat

So looks like I should hold on till atleast first year & in the meanwhile keep regular payments against principal so that I pay less interest overall.

Thanks guys

My 2 cents. Hold on for a while with the current loan. Try get a quote from DCU for you. They are pretty helpful and has a nick name for being a desi credit union amongst alot of people.
I would do this. Save up your cash for a year. Get a quote from DCU, use that cash to go against the principal and finance the rest.

I have my loan at 2.4% for 5 years and my previous was 10% for 6


They did offer me 1.99% but i had to move my salary account to their bank.

Maddy

PS: its called digital federal credit union based out of Mass.

[Technocrat]

Thanks Vineeth & Maddy.

My understanding is that Credit unions are applicable only to local residents in which case all these options wont apply to me if these CU's dont exist in my city or state.

Is my understanding correct?

[kraft.wagen]

Originally Posted by Technocrat

Thanks Vineeth & Maddy.

My understanding is that Credit unions are applicable only to local residents in which case all these options wont apply to me if these CU's dont exist in my city or state.

Is my understanding correct?

No you can open a CU account from anywhere. I live in LA and have my auto loan with DCU

I think they tell you to donate $5-$10 to some military charity to get your account signed up.

Plus if you do a direct deposit they give 0.5% lower rate.

[vineethvazhayil]

Originally Posted by Technocrat

Thanks Vineeth & Maddy.

My understanding is that Credit unions are applicable only to local residents in which case all these options wont apply to me if these CU's dont exist in my city or state.

Is my understanding correct?

No. Not at all. They will take business from anywhere!

Originally Posted by kraft.wagen

No you can open a CU account from anywhere. I live in LA and have my auto loan with DCU .

And I have my accounts with Patelco CU - they are based in California. All my paperwork was handled electronically.

[vineethvazhayil]

Originally Posted by vineethvazhayil

GM and German - I'm reintroducing a suggestion - try the Buick Regal - it is an Opel under the skin, and hence German. You might like it quite a bit. Had one on rent recently. Nice car.

Although I would goto CR only for crowd sourced reliability numbers, they have actually picked the Regal as the Top Pick in Sports Sedan category - This includes a mix of features, reliability, driving feel etc. You should try it out. Buick is actually no longer the grandma's car (the image they are trying to shed).

[Technocrat]

Originally Posted by kraft.wagen

No you can open a CU account from anywhere. I live in LA and have my auto loan with DCU

Originally Posted by vineethvazhayil

No. Not at all. They will take business from anywhere!

Thanks a lot guys, I wasnt aware of this

So will wait for a few more months(close to a year in the loan) & then refinance with one of these CUs. In the meantime will probably try to lower the outstanding principal amount

[aah78]

Originally Posted by Technocrat

Thanks a lot guys, I wasnt aware of this

So will wait for a few more months(close to a year in the loan) & then refinance with one of these CUs. In the meantime will probably try to lower the outstanding principal amount

Tech, to improve your credit rating just continue paying your credit card(s) & loans on time & always try to pay-off balance or as much as you can over minimum amount due.

Credit rating can be easily downgraded by over-spending (going over limit on credit cards, etc.), missing multiple payments, but it takes a longer time to improve the rating.

As far as CU's, most of them do require you to be part of a certain trade but some of them (e.g. DCU) will let anyone join as long as you pay the required joining fee & a small contribution to a charity.

Patelco is not a Credit Union of/for/by a Patel - I checked.

[vineethvazhayil]

Originally Posted by aah78

Tech, to improve your credit rating just continue paying your credit card(s) & loans on time & always try to pay-off balance or as much as you can over minimum amount due.

Credit rating can be easily downgraded by over-spending (going over limit on credit cards, etc.), missing multiple payments, but it takes a longer time to improve the rating.

As far as CU's, most of them do require you to be part of a certain trade but some of them (e.g. DCU) will let anyone join as long as you pay the required joining fee & a small contribution to a charity.

Patelco is not a Credit Union of/for/by a Patel - I checked.

Good one! Patel wants every ones business!

Regarding credit ratings, on time payments are most important, followed by revolving credit utilization, average age of open accounts and number and type of accounts. Ratings are calculated differently based on type of credit you are trying to avail. A person with excellent credit for a credit card may only be very good for a mortgage. Just make regular payments, don't close any old accounts if you can.

[Technocrat]

Originally Posted by aah78

Tech, to improve your credit rating just continue paying your credit card(s) & loans on time & always try to pay-off balance or as much as you can over minimum amount due.

Thanks for that tip on partial payments against principal, will start doing that. I never miss my payments, so I am good there.

Credit rating can be easily downgraded by over-spending (going over limit on credit cards, etc.), missing multiple payments, but it takes a longer time to improve the rating.

I am good there too, my Credit usage/utilization is in single digits

As far as CU's, most of them do require you to be part of a certain trade but some of them (e.g. DCU) will let anyone join as long as you pay the required joining fee & a small contribution to a charity.

Now I know

Patelco is not a Credit Union of/for/by a Patel - I checked.

Damn, I was almost expecting that it would be either of/for/by a Patel

[ToroRosso]

Originally Posted by kraft.wagen

I live in LA and have my auto loan with DCU

.

Did you get a new ride?

Techno - Mine was with DCU for both car and bike . Started the car with 8.49%, refinanced with in DCU 1.49% after 3 months. I paid off the car loan in about 8 months and bike (1.49%) in about 2 months. Credit scores were not impacted and at the end of the Year 1, I was in the excellent category

[kraft.wagen]

Originally Posted by ToroRosso

Did you get a new ride?

Techno - Mine was with DCU for both car and bike . Started the car with 8.49%, refinanced with in DCU 1.49% after 3 months. I paid off the car loan in about 8 months and bike (1.49%) in about 2 months. Credit scores were not impacted and at the end of the Year 1, I was in the excellent category

I meant the motorcycle loan