Do refinancing help or hurt your credit?

Question

I purchase a car in early August. I felt pressure to buy extra warranty and a gap for extra protection for my car. I was also told after 6 months I can bring my car back for a trade in, for the car I really wanted.. Now with the warranty and the gap it added about $65 more to my payment which is out of my budget. I already have two other trucks, paid in full and when I added the new car to my insurance it went up to almost $200 a month. The warranty and gap I was told I could drop it anytime, with the understanding it would drop my payment back to where it was before. Now I try to get it drop, and I am being told I have to have my car refinance again in order to bring my payment down. Now they also told me on the phone I would not have to come up with any addition down payment. If it was the Toyota car dealership who finance me. I like to know why couldn't they do the changes without the refinance? I did notice when I did finance my car it brought my score up some points. Do I get more points again or will I lose points on my credit score?I am trying to build up my credit scores not lose them. Thank you for your answers I do appreciate them.

Answer 1

No, refinancing alone should not hurt your credit score.  Obviously, late payments will hurt.

If you believe you were mislead you may want to pursue this with some legal authorities such as an state attorney general office.

But make sure you get everything in writing and you understand with you are signing.

Good luck.

Answer 2

Do you mean early this August? I don't think it will hurt you that much, maybe a little for being too soon. They might run your credit again. If it is run too often in too short a time your score can drop. If they are the only ones who ran it, or are going to use the information they already have, then it shouldn't do anything at all to your score. In order for it to help your score you would have to wait 6 months to refinance. As for why they cannot make the changes without a refinance, the payment and all it includes is within your contract. To remove an item you have to get a new contract with a new payment. Also, sometimes they don't actually do the financing. They just send the financing out to certain banks. Any changes would have to be made with them and in writing.

Answer 3

It  shouldn't hurt your score. It will show you financed the car, then paid off the loan. Never buy gap at the dealer.Your insurance company can cover it for less. The refinancing will be for a used car, usually at a higher rate, but since some of the loan was paid off, it may drop the monthly payment, especially if it for more months. Your total payment will likely be more though. Insurance is based on many factors, theft and repair rates, your age, location. ASk your agent before you buy, certain models aare less/more.