The term length of your auto financing is 36 months. You decide to trade your vehicle in after 12 months of ownership. You trade in your current vehicle and take out another loan for a new vehicle.
Does this process have any negative or positive effect on your credit score?
- On one hand, you are paying off your loan in full, due to the trade in value paying off the remainder of the car loan.
- On the other hand, your automobile financing company is doing a "hard pull" on your credit in order to approve you.
What would happen in the same scenario, but where you owe more than your car is worth?