Question:
I have a car loan with 22 payments to go. About 2 years ago, I went through a divorce and because of this I had a period of 8 months where I was constantly 1 month behind on the payment. Due to this period, I now have 8 30 day late payments showing up on my credit report. After the divorce was final, I was able to catch back up and I have now made 14 consecutive payments on time.

The apr is currently 15.99% which is ridiculous, but I needed a car and rushed into the deal. My current credit score with experian is 646. In order to maximize the effect on the score, should I refinance the car and get a lower apr or continue to make the payments on the existing loan? Is there any possibility of getting those late payments removed if I continue paying on time or by some other means?

Answer:
Those late payments are going to show on your report for YEARS, unfortunately. I had a friend who had a period he was out of work 5 years ago and his late payments are STILL listed and hurting his score even today although everything since has been on time. That said, I would go to an online site like capitaloneautofianance.com and apply for a refinance. They will tell you if you are approved the rate right away.

You then, I believe, can decide to not use the payoff check they send you and forget the whole thing. But, you may be able to reduce your rate even if it doesn't help your score right off .

The apr is currently 15.99% which is ridiculous,

Ridiculous? If I were asked to put my money in an investment that failed to make timely dividend payments 8 months in a row, I'd demand a helluva lot more than an 15.99% return to keep my money there.

The 15.99% was the rate I got before the late payments. At the time of purchase, I had perfect credit but I was young and had no co-signer therefore the rate seems ridiculous to me. With my credit score, as it is now with the late payments, I can expect a rate less than 11%.

So refinance at the lower rate on a 24 month loan. Add a little principal each month to pay it off in 22 months (or sooner). Good credit history doesn't come from playing games. Good credit history comes from making sound financial decisions (like paying as little interest as possible). Capital One lists these rates currently for refinance: 5.95 % 6.45 % and 7.25 % Now, they are listed as the "as low as" rates and are for different terms but I would find it hard to believe they would jump as high as 15.99%. Doesn't hurt to ask them. They will check your score automatically and let you know what YOUR rate will be. ou'll be fine. Geesh it is just a little car payment. It won't be worth the time and finance charges to worry about it. Just pay it on time and make you other payments on time and next time you finance a car pay more attention. Don't have more then 5 credit lines unless they are for business use. Dont let your debt to income ratio exceed 45%. You will be back in the 700's in no time.