Refi of Car Loan

Folks, I need your advice. I presently have a car loan which is 30-days past due and which is showing as such on my Experian credit report. I have been running one payment behind for a number of months and have been unable to get it caught up to date. My lender has offered to refinance the loan for me, and I am wondering whether, strictly from a credit standpoint, I should consider their offer.

Here's the particulars on the loan. I owe $8658 and have 17 payments remaining on a 60 month loan. The interest rate is 17.60%. They will refinance the loan, with no fees or costs, over 24 months, at the same interest rate. The new payment would be about $8.00/month less than the currently payment (but if I factor in the late charges I am paying every month, it increases that savings to like $40/month).

The lender will not "delete" or "re-age" my existing loan under any circumstances; thus, regardless of whether I can bring the existing loan current or I refinance it, I will still have the 30-day late notation on my report. If I were to refinance and stay current, though, I would have a positive installment account being reported.

I know that strictly from a mathematical standpoint I should just find the way to get current and payoff the existing loan over the remaining term, but I am most concerned with getting the best credit effect out of this. Would I be better off to just get current on the existing loan, stay current on it, and then challenge the late pays on my credit report? Or do the refinance, while at the same time challenging the late pays on the old (refinanced) loan?

Any and all opinions would be really helpful to me. Thanks guys and gals for your input.

 

Breeze - no, nobody has mentioned that to me. When asked, the lender (WFS Financial) told me that if I were to refi, they would payoff the existing loan in full and open a brand new loan account for me. So, I'd end up with two loans being reported to the bureaus - the old, paid-off loan (the one with the 30-day lates), and the new, refinance loan (paid current).

I guess what it really comes down to for me is (1) from a credit standpoint, is it better to just tough it out on the existing loan, or get myself immediately current through the new loan (at a cost of probably $1600 in extra interest over the life of the new loan); and (2) if it is best from a credit standpoint to do the refi, does it make any sense economically? Of course, what also factors in is the likelihood I can get the 30-day late pay notations deleted. Is it more or less likely for me to get them deleted if the loan is paid off in full?

I wish I knew the answers to these questions. Again, opinions and advice are needed.

 

In considering the credit aspect of this, I also have to consider that if I did the refi, I'd have a new account being shown on my report, which could reduce my credit score. But would this reduction be offset by the fact that I have paid off in full a loan which was being shown as delinquent? Hmmm...anyone?