We recently took out a car loan at 0%. Should we pay this off to get better mortgage options (e.g., rates, terms)? My guess is that it would affect the amount that you're approved for, but possibly not the rate and other terms, but I'm not an expert. I appreciate your guidance. Thanks!
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posted: Feb. 11, 2013 @ 8:48p
Not sure you've provided enough information for anyone to be very helpful, but it may or may not be to your advantage. They'll look at many things, one of which will be your montly income vs. monthly debt obligations. I doubt it would have any effect on your rate or terms, but could effect what they approve you for on a monthly basis for the mortgage. Regardless, if you have the cash to pay (without leaving you with no cash), why not just look at putting that on the mortgage and it could potentially help your rate (ie., lower rate based on LTV). It won't reduce your monthly obligations as much as paying off the car, so that's basically the question you have to answer for yourself (lower montly debt obligation vs. some savings on interest for a few years/potentially lower rate). Run the numbers and see what makes most sense (along with what you can risk with the cash outgo).
posted: Feb. 11, 2013 @ 9:20p
Mine wasn't at 0% but I had about a year left on my car note, and I inquired about paying it off before locking in the rate for my mortgage and the loan officer said it would definitely help. That was 10 years ago though.
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