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Here’s the short answer.Auto Approve is using artificial intelligence to improve the consumer experience in several key ways:Auto Approve’s proprietary NOVA system makes better loan matches fasterOnce an offer is accepted, the proprietary AVA platform reduces paperwork processing timesAnd the VERA quality assurance program is leveraged by customer service to ensure compliance and service quality throughout the refinance processRead on for a more in depth look at each system and how they’re being leveraged for a better refinance.How AI Is Changing Auto LoansAuto Approve is at the vanguard of a shift in the multi-billion dollar auto refinance industry, leveraging AI to make better use of existing data.In this guide, we’ll cover:Auto Approve’s unique dataset NOVA (Network Offer Validation and Allocation)AVA (Automated Verification Assistant)VERA (Verification and Experience Review Automation)The future of AI in refinanceWhy it mattersAuto Approve’s decade of dataWith over $5.5 billion in funded auto loans across more than 180,000 refinances, Auto Approve's AI capabilities are built on a proprietary dataset including ten years of lender decisions, loan performance history, customer documents, and call recordings across more than one million applications. This data trains and refines NOVA, AVA, and the company's broader AI systems — and it compounds with every new loan.“Every loan we process makes the next one smarter,” said Jordan Batt, CEO of Auto Approve. “What sets us apart isn’t just the implementation of AI. It’s the data underneath it. We’re training our systems on nearly a decade of auto refinancing outcomes. That’s something you can’t shortcut.”NOVA (Network Offer Validation and Allocation)In short: Smarter loan matching for borrowers.Auto Approve’s proprietary Network Offer Validation and Allocation (NOVA) system analyzes each borrower’s credit profile, vehicle, and loan details against the lending criteria of more than 50 partner institutions to surface the best offers available in real time. NOVA can continuously learn from shifting borrower behavior, credit conditions, and trends in loans funded. The result for consumers: 50% of applicants can now be matched with a refinance loan offer in one click. No additional input required, and no shopping from lender to lender.AVA (Automated Verification Assistant)In short: Faster, more accurate loan processing. Once a borrower accepts an offer, Auto Approve’s proprietary Automated Verification Assistant (AVA) platform takes over the paperwork. AVA uses AI to verify, classify, and process the documents required to fund a loan, reducing processing times by at least a third, getting borrowers to their closing faster. AVA went live in Q1 2026 and represents the company’s investment in removing friction from the auto refinancing process for consumers and lenders. VERA (Verification and Experience Review Automation)In short: AI-powered quality assurance. Auto Approve's Verification and Experience Review Automation (VERA) system uses AI to monitor 100% of calls in which a customer gives consent to ensure compliance, script adherence, and service quality. This solves a common problem in the industry, where a customer may get a different outcome depending on their representative. Auto Approve ensures that every borrower gets a more consistent, higher-quality refinance experience.In addition, Auto Approve has deployed AI-powered agents that simulate real customer interactions, allowing new hires to build skills in realistic scenarios before ever speaking with a live borrower. The result: onboarding time has been cut in half without compromising the customer experience. The future of artificial intelligence in refinanceThese systems are only the beginning of what AI can do to help ensure better outcomes and easier processes for borrowers. As the world of refinance looks to the future, solutions could:Increase fairness in lending opportunitiesImprove lending outcomes by making better matches through dataIdentify good refinance candidates that may previously have been overlooked or rejectedMake refinance available on any schedule through AI-enhanced customer serviceContinue refining enhancements through machine learning Why Auto Approve’s AI mattersMortgages, banking, and the automotive sector have all seen productivity growth with the implementation of AI, and refinance companies like Auto Approve are following close behind, leveraging proprietary data and technology to make refinancing simpler, faster, and more efficient.According to Experian’s State of the Automotive Finance Market Report, the average refinance customer saved 2% on their APR through refinancing as of Q4 2025. However, not everyone who’s eligible to refinance has been taking advantage of the cost saving measure. 80% of borrowers have never refinanced their vehicle, even when eligible for a lower rate. And recent research from Trans Union found that almost a quarter of open auto loans in the U.S. have current loan rates that “exceed the prevailing average APR,” meaning roughly 18 million borrowers are good candidates for refinance right now, if not more.Automotive refinancing is seeing substantial growth, and that growth is projected to continue. American auto loan debt is high, and interest rates have been elevated in the past several years. The refinance industry is perfectly positioned to ease economic stress caused by these combined factors. And thoughtfully deployed AI should make that higher volume of applications faster to process without loss of quality or attention.Are you one of the millions that could save on your auto loan?Check if you may be eligible to lower your car payment in less than a minute. Getting a quote is free and fast, with no commitment or hard credit pull required.Get started now.

Here’s the short answer: For most people, a 2-3 year lease will be the ideal term length. This is the most common amount of time to lease a car. Shorter and long term leases are available, but short term leases tend to be expensive, and long term leases remove some of the benefits of leasing rather than buying. In this guide, you’ll learn everything you need to know about lease terms and how you can decide what is right for you.Your complete guide to car lease termsRead on for the answers to the following frequently asked questions about lease terms:What is a lease term?What lease term should I choose?What happens at the end of a car lease?What Is A Lease Term?When you lease a car, you are essentially renting the car from the dealership, and the lease term is the amount of time that you agree to rent the car for. Lease term overview:Some dealers offer short term leases, which can be 3 month, 6 month, 9 month, or 12 month lease terms. On the other end of the spectrum, there are longer term leases up to 4 or 5 years. However, it is most common for dealers to offer 2-3 year leases. When determining which lease term is right for you, you should consider:Your monthly budget for car paymentsHow you intend to use the car and why you are leasing in the first placeWhen you choose a short lease term, you pay less interest, but the monthly payments will likely be high. With a longer lease term, your payments will be lower, but you’ll pay more in interest over time and are more likely to end up with out-of-warranty repair expenses. This is why 2-3 years tends to be the lease term of choice for most lessees. Additionally, if you’re leasing because you like to get a new car every few years rather than deal with the wear and tear of aging vehicles, it doesn't make sense to get a longer lease. If you’re happy with one car for a long time, financing a car to buy will typically make more sense than leasing.What Lease Term Should I Choose?The 3 categories of lease term again are:Short term2-3 yearLong termRead on for a more in-depth look at each category and guidance for how to choose the right one for you.Short Term LeaseShort term leases are not very popular, and for good reason. You will pay the most amount of money per month for a short term lease (and it may even be more expensive than financing). However, there are still times when short term leasing may make sense for you. For example, you might want a short term lease if:your usual vehicle is undergoing extensive repairsyour previous vehicle needs to be replaced but you aren’t ready to buy you want to try a different kind of vehicle out before committing to ityou don’t normally need a car or second car but have to spend quite a bit of time on the road over a set period of time due to work or family obligationsIf you know you will need a car for several months, but not longer, a short term lease may make more sense than a rental car, in terms of cost and convenience. Since rental car companies charge by the day, with few discounts for longer term rentals, they can quickly turn into a big expense.2-3 Year Lease2-3 year leases are the most popular when it comes to vehicle lease terms. This term length allows you to have the car for a decent amount of time while still giving you the benefits of leasing. Typically, your warranty will last the entire period of your ownership, so you do not need to worry about expensive repairs. You will also get more reasonable monthly payments by choosing 24-36 months. Within this category, most people prefer 36 months (a 3-year lease) – this lease term will usually get you lower monthly rates and total costs, whereas 24 months (a 2-year lease) offers greater flexibility if you want to upgrade your vehicle sooner, but will typically cost more monthly and may come with fewer incentives.Long Term LeaseYour other option is to select a long term lease, which is typically 4 years (48 months), though there are leases up to 5 years (60 months) that may be available. These leases will give you the lowest monthly payments, but you do run the risk of outlasting your warranty and racking up surprise costs for repairs and maintenance that leasing otherwise usually allows you to avoid. These leases are also the least flexible in terms of upgrades and often come with higher fees and more paid in interest. How To Decide The Best Car Lease Term For YouHere are a few questions to ask yourself to help you decide on the right length of time for you to lease a car:Why do you want to lease a car? Is it a short term or long term need?Are you happy to pay a little more to get to trade your car in 2 years? Would you rather pay less every month and stick it out a little longer with your ride? Is your budget tight enough that a lower monthly payment would be a big help, even if it means paying more in interest over time?Do you have the cash flow to handle out-of-warranty repair and maintenance costs at the end of a longer lease?In the end, this decision simply comes down to your budget, needs, and preference.  Consider what is important to you and what you can afford in order to make the right choice. What Happens At The End Of A Car Lease?You will have three options at the end of your lease term:Trade in for a new leaseTurn the car in and walk awayPurchase your leased car from the dealershipTrade InWhen you trade in your leased car, you simply return your car, pick out a new one, and sign a new lease agreement.Many people who lease like to have a new car every few years, and leasing allows them to do so with minimum stress. Trading in is a great option if you would like to continue leasing, haven’t gone over the mileage limit, and haven’t had major wear and tear on your car. Turn The Car InIf you have decided that leasing isn’t right for you, you can turn your lease in and walk away. You will be responsible for any fees due to excessive mileage and excessive wear and tear, but beyond that, you will be free to do as you wish. Maybe you do not need a car at all, or maybe you’d be happier buying a new or used car. Buy out Your LeaseBuying out your leased car means purchasing your car for the residual value that is listed in your contract. This is a great option if any of the following apply to you:The residual value of the car is less than the market value of the carYou really like your car and you don’t want to part with itYou have gone over the mileage allowance and will be responsible for overage feesYou have significant wear and tear and will be responsible for feesIt is not uncommon for residual values that are listed in the lease contract to be less than the market value of a car. This is because residual values are determined at the beginning of the lease and cannot be changed. The increased competition in the used car market over the past several years has caused an increase in market value, so your buyout price may be cheaper than the car’s value. This means that even if you do not want to keep the car, you might be able to buy your leased car and sell it for a profit. Getting a lease buyout loan is a great way to do this.Or, maybe you just really like your car and don’t want to part with it. Buying your lease out is a great way to own the car that you love, and is usually a very affordable option.That’s Everything You Should Know About Car Lease Terms Now you should have the information you need to decide which lease term length is right for you.Leasing a car is a popular option for many people, but it can be hard to decide what length of lease term is appropriate. Taking a look at your needs and your budget can help you determine which lease term length is best for you. And when your lease ends, a car lease buyout loan can help you keep your car.If you are interested in buying out your lease, the experts at Auto Approve are here for you. Our agents can guide you through the application process and find the car lease buyout loan that is right for you.Get started today.

Here’s what you need to know. If you were previously unable to refinance your car loan and save money, you may be eligible now to do so if: your credit score has gone up, your overall financial picture has improved, your vehicle’s value has increased, or lower interest rates are available than the last time you checked, making a beneficial refinance available to you.Read on to learn more.Car Loan Refinance Eligibility: Your Complete GuideIn this guide, we’ll break down:when you’re more likely to be eligible to refinance your car loanhow to know if you’re likely not eligible to refinance your car loanWhy You Might Be Eligible To Refinance Your Car LoanYou may have become more eligible for a beneficial refinance if:Your credit score has improvedYour income has increasedYour debt has decreasedYour vehicle’s value has gone upYour Credit Score Has ImprovedA low credit score is one of the top reasons people are ineligible to refinance their car loans. Credit scores are important because they indicate to lenders how likely a person is to repay the money they borrow. The following factors make up your credit score:Payment history (35%) – This category tells lenders if you pay your accounts on time, and if your payments are on time, full, and consistent.  Amounts owed (30%) – This category tells lenders how much debt you are in. The accounts owed category calculates how much debt you are in compared to how much credit is available to you. This is called your credit utilization ratio, which measures the amount of money you owe to the amount of credit you have available to you. Lenders look for this ratio to be 30% or less.Length of credit history (15%) – This indicates how long you have had your accounts open. Credit mix (10%) – This section shows how diverse your portfolio is; a good mix of loans, credit cards, retail credit cards, mortgages, etc will help show lenders that you are able to balance having varying accounts open.New credit (10%) – If you are opening new accounts, this indicates to lenders that there is variability in your debt. In other words, you may currently owe more money than your current report is reflecting. A change to any of these categories can significantly affect your credit score, and therefore significantly affect your loan refinance eligibility. This is particularly true if your score increase pushes you into a different credit score bracket:Exceptional (Super Prime): 800-850Very good (Prime): 740-799Good (Near Prime): 670-739Fair (Subprime): 580-669Very poor (Deep Subprime): 300-579If your credit score increases from 650 to 700, that can have a huge effect on your eligibility AND on the car loan APR you are offered. Your credit score is likely to increase when you:Make consistent, full, and on-time paymentsPay off debt (reduce your credit utilization ratio)Have a negative event expire (such as a bankruptcy)Have an increase in your line of creditIf your credit score has increased, it is definitely worth considering an auto loan refinance.Your Income Has IncreasedWhen you apply for a car loan, lenders look at your DTI: your debt-to-income ratio. Do you make enough money to support the debt you are in? A high ratio may indicate to lenders that you are in over your head financially and are less likely to keep up on payments.An increase in income will reduce this ratio. So if you got another job (or a raise) since your initial refinancing application, you may now be eligible for a new loan.Your Debt Has DecreasedPaying off debt will not only help your credit score, but help lower your debt-to-income ratio as well. Just as an increase in income will lower your DTI, so will paying off debt. So if you have paid off some student loans, eliminated some credit card debt, or have just consistently been paying off your debt without taking on more, you may have lowered your DTI significantly. And this can make you eligible for auto refinance.Your Vehicle Has Increased In ValueEven if everything about your personal financial picture is around the same, you may be eligible to refinance right now if the value of your vehicle has gone up, lowering your LTV, or loan-to-value. During the pandemic, the price of new and used cars went through the roof, and values have remained somewhat elevated, so your vehicle may be worth more than you know. Get a free quote from Auto Approve or look up your car in the Kelley Blue Book to find out more about your vehicle's value and how it may have affected your eligibility for refinance.Why You Might Not Be Eligible To Refinance Your Car LoanWhile there are some things that may make you eligible to refinance your car loan now, there is still a chance that you are not eligible.You may not be eligible for a beneficial refinance if:your credit score has decreasedyour income has decreasedyour debt has increasedyour car is ineligibleyour loan is ineligibleYour Credit Score Has DecreasedIf your credit score has decreased recently, especially if it has dropped below 650, you will most likely not be eligible for car loan refinance. And if you are eligible, you might not qualify for a good car loan APR. It is a good idea to work on improving your credit score before applying.Your Income Has DecreasedIf your income has decreased due to a job change or other reason, you may not be eligible for car loan refinance. That’s because, even if your debt is unchanged, this drop will increase your DTI, making you a less desirable loan applicant.Your Debt Has IncreasedSimilarly, increasing your debt will increase your DTI ratio and make you a less desirable car loan applicant.Your Car Is IneligibleLenders have requirements when it comes to the vehicle you will be refinancing. Typically, the older the car is, the less inclined a lender will be to refinance. If a person is unable to pay their loan, the lender is entitled to take the car as collateral. In this case, they will need to be able to sell the car to recoup their losses. So if the car is older and/or has a lot of miles on it, they will not be able to get as much money for the car.Each lender will have their own vehicle requirements, but it’s common to require that the vehicle have less than 125,000 miles on it and be less than 12 years old. Lenders are ultimately concerned with your vehicle’s loan-to-value ratio, which is the balance of the loan compared to the value of the car. If your loan is $15,000 and your car is valued at $15,000, your LTV is 100%. Your car will depreciate in value as time goes on, and you want your loan balance to keep pace with that. A RateGenius survey from 2015 to 2019 found that 90% of approved applicants had an LTV of less than 123%. However, as we mentioned above, used car values rose dramatically from 2020–2022 and have stayed relatively high, so if your vehicle was financed before the pandemic, it’s worth checking its current value.Your Loan Is IneligibleIf there isn’t a lot of time remaining in your loan, or if the balance isn’t large enough, you may not qualify for a car loan. Lenders will not find value in taking on a small loan, as they will not make much in interest. Each lender will vary in their guidelines.Why You Should Refinance Your Car Loan With Auto ApproveWhy should you consider Auto Approve for your car loan refinance? we take refinancing personallywe don’t waste timewe shop around for the best dealswe never mark up pricesIf you think you may be eligible for a car loan refinance, consider refinancing with Auto Approve. Auto Approve specializes in auto loan refinance and has relationships with trusted lenders across the country. This means you can easily find the most competitive rates available to you.We Take Refinancing PersonallyWe know how overwhelming the thought of refinancing can be, and you may feel like you don’t even know where to start. And we get it. That’s why we give you a real person to guide you through the process. Just read our reviews to see how much our customers love working with our refinance specialists. We Don’t Waste TimeOne of our top compliments from customers is about our fast turn around. We know that your time is important, so when you get a quote from Auto Approve, we make sure to get to work right away. We have great relationships with lenders around the country, so you can get great offers, fast. Our trusted refinance experts can help you decide on a loan and get all of the paperwork done quickly. We even handle the DMV paperwork for you. Using Auto Approve streamlines the refinance process to save you time and money.We Shop Around For The Best DealsThere are a lot of lenders out there, from credit unions to traditional banks to online lenders. It can be overwhelming to know where to start. At Auto Approve, we handle comparison shopping for you, getting quotes from our network of 40+ lenders. Our experts understand which lenders might be the best match for you and can help you lock in your best deal. We Never Markup PricesAt Auto Approve, we never add mark-ups or hidden fees. We believe in passing the savings right on to you, which is why we never inflate our prices or charge extra.That’s What You Need To Know About Car Loan Refinancing EligibilityNow you know why you might be eligible for car loan refinancing even if you weren’t before, and why you should consider refinancing your car loan with Auto Approve.If you haven’t been able to refinance in the past, you may be eligible now to do so. An increase to your credit score or income, or a decrease in debt could make you eligible for a low car loan APR and lower monthly car payment. Get your free quote to get started today!

Here’s the short answer:Guaranteed Asset Protection, or gap insurance, is optional insurance that kicks in if your car is totaled or stolen. It essentially covers the “gap” between what you still owe on your vehicle and the depreciated value of the vehicle. Read on for more…In this guide to gap insurance, you’ll learn how this type of insurance works, how much it costs, and when you should consider getting it.Your Complete Guide to Gap InsuranceIn this guide, you'll get answers to the following Frequently Asked Questions about gap insurance:What is gap insurance for?How does gap insurance work?How much does gap insurance cost?Is gap insurance required?How do I decide if I need gap insurance?Is gap insurance really worth it?How do you get gap insurance?What Is Gap Insurance For?If you have a car loan, it is possible that your car may be or become valued at less than you owe on it. This becomes a major problem if something drastic happens to your car. For example, if your car is stolen or totaled, the insurance company will typically only pay out what the car is valued at, not the amount that you have left on your loan, leaving you still making payments on a vehicle you no longer have. How Does Gap Insurance Work?Gap insurance kicks in when there is a gap between what insurance will pay and what you still owe on a vehicle. For example:Say you take out a loan for $20,000 on your new car, and a few months later your car is totaled while it is parked outside your house. You file a claim with your insurance company, and they agree to pay $17,000. The $3,000 difference is ultimately your responsibility, even though the situation was completely out of your control. If you have gap insurance, then you would file a claim and your policy would cover that difference.Gap insurance ultimately works in conjunction with comprehensive and collision insurance to minimize or eliminate your out of pocket expenses.How Much Does Gap Insurance Cost?Like everything, the cost of gap insurance can vary greatly between insurance companies. The following variables will affect the cost of gap insurance for your vehicle:Where you liveYour ageYour previous claims historyThe actual value of your carThe total amount you owe on your carIf you go through your current provider, you can expect to pay a yearly flat fee of $500 to $700 for the coverage. If you finance through a credit union, you can expect a monthly add on of $20-$40. At AutoApprove, we work with lenders to get the best rates on gap insurance possible, usually costing around $14 per month. As far as insurance coverage goes, it offers a great return on investment should you ever need it.Is Gap Insurance Required?Gap insurance is not a required insurance, but may still be a good idea depending on your financial picture. Some types of insurance are typically required by your state or your lender, depending on your location and situation. Liability Insurance. This insurance is required by almost every state in the United States (excluding New Hampshire). It is composed of three parts: bodily injury coverage per person, bodily injury coverage per accident, and property damage coverage per accident. This covers any damage you may cause to another driver, their passengers, or their property, including their car.Comprehensive Insurance. This covers the cost of damages to your vehicle if there is a non-crash accident, such as weather damage or theft. Comprehensive insurance also covers damage that occurs if you hit an animal. Collision Insurance. This covers damages to your vehicle if you hit or are hit by another vehicle.If your car is financed, you may be required to get all three types of insurance. Even so, it is possible that these policies may not cover all of the damages in the case of an incident, and you could end up still owing money on your car.How Do I Decide If I Need Gap Insurance?If your car is not financed, you do not need gap insurance. If your car is financed, it depends largely on the expected depreciation of your car. It is important to remember that cars depreciate rather quickly, losing about 20% of their value in the first year alone. It is always worth checking Edmunds or Kelley Blue Book to see what your car is worth. Here are some factors that can help you decide if gap insurance is necessary: You put less than 20% as down payment on your car. This makes you more likely to end up with negative equity as soon as you leave the dealership. Your car depreciates the minute you leave the dealership, so if you only put down a low down payment, you might immediately owe more than the car is worthYour car is a lease. Some leases require gap insurance in addition to collision, comprehensive, and liability.You drive a lot compared to the average person in your area. This will cause your particular car to depreciate faster. Your car model has a tendency to depreciate fast. Some cars simply lose value faster than other cars, while some cars hold their value extremely well. Gap coverage might be worthwhile if your car model doesn’t hold its value particularly well.Your car loan repayment period is long. If your loan is 5 years or longer, there is a higher chance that your loan balance will exceed your car’s market value. Gap insurance can protect you from this depreciation.Is Gap Insurance Really Worth It?If there’s a good chance your car will depreciate faster than you will pay it off, you should strongly consider gap insurance. You will need to do the math to determine if gap insurance is worth the investment.  First, go online to determine how much your car is worth. Use sites such as Kelley Blue Book and Edmunds to get a value for your make and model. It is best to find an end of year value for each year of your loan.Take a look at your loan terms. See how much you will owe each year, and compare this to what your car will be worth at the end of each corresponding year.Calculate how much gap insurance will cost for each year.Look at the difference in your car’s value and what you owe at the end of each year. Based on this, determine how much gap insurance will save you in the event of a disaster. How Do You Get Gap Insurance?Guaranteed Asset Protection (GAP) usually comes with your loan or can be purchased from your lender. If your insurance company does not offer gap insurance, you can purchase it as a stand alone policy from another provider. You can also add gap insurance when you refinance a vehicle.Now You Know About Gap InsuranceGap insurance is designed to cover what collision and comprehensive insurance do not cover, and can protect you against depreciation.If you’re choosing to refinance your vehicle with Auto Approve, we will work with you to make sure your new loan includes any gap coverage that makes sense for you. We work with our network of lenders to get you competitive quotes, then help you choose the rate and coverage that best fit your needs.Get your free quote now.

Here’s the short version.Interest is essentially the cost of borrowing money, usually expressed as a percent of the total amount borrowed. The interest rate is the name we give the percentage charged (or earned) on borrowed money.Say, for example, you lend me $100 with 5% simple interest to be paid back within the year. That means, when I pay you back, I’ll owe you a total of $105. $5 is the interest I paid as a fee for borrowing that money from you, and 5% is the interest rate on the loan. You get that $5 to pay you for taking on the risk of lending money, in case for some reason I failed to pay you back, or inflation made $100 worth less by the time you got it back.Interest rates are applied to just about every common lending or borrowing situation that occurs in a professional financial setting. Vehicle loans, mortgages, student loans, business loans, credit cards, and so on all have interest rates applied to them.Interest rates are affected by the economy. They respond to the supply and demand of credit, inflation, and government monetary policy.When it comes to your loans and payments, changes in interest rates can reflect in your personal finances. For example, loans with variable rates may see rate changes, or you may be able to save money through a well-timed refinance.Read on for a more in-depth look at interest rates – what they are, how they work, and why they matter (even if you’re already locked into loans).Your Complete Guide To Interest RatesIn this guide, you’ll get the answers to these Frequently Asked Questions about interest rates:What are the kinds of interest rates?What’s the difference between interest rate and APR?Who determines interest rates?What causes interest rates to go up and down?How do interest rates affect car payments?How do you know if market changes mean you could save money?What are the reasons people consider refinancing?What are the kinds of interest rates?Here are a few key terms to help you better understand loans and interest rates:Simple interestCompound interestPrime rateFixed rate loansVariable loansAPRAPYSimple InterestSimple interest is interest that is applied only to the base amount borrowed or lent. Simple interest percentages are charged on a per year basis, using the following formula:Interest = principal x rate x term (in years)So, let’s say you borrowed $100,000 at 4% to be paid back over the course of 5 years. With simple interest, you would pay:$100,000 x 0.04 x 5 = $20,000$20,000 in interest, meaning the total you’d have to pay back over the course of 5 years would be $120,000 – you’re paying back the principal plus the interest.Compound InterestCompound interest is interest that’s applied to the base amount borrowed plus any interest owed from previous periods.It’s calculated using the formula:Interest = principal x (1 + rate)term – principalSo, taking the same lending scenario but making it compound interest, you’d have:$100,000 x (1 + 0.04)5 – $100,000 = $21,665.29That means you have $21,665.29 to pay in interest. Compound interest is more commonly used in business scenarios like investing.Prime RateThe prime rate is a reference rate or base rate used by banks. While each bank sets their individual base rate, resources like the Wall Street Journal typically take the average of recent rates from a wide group of major financial institutions to determine a U.S. prime rate. The rate tends to fluctuate based on factors like the Federal Reserve’s federal funds rate.Fixed Rate LoansFixed rate loans are loans that have a set interest rate for the life of the loan. Fixed rate loans are popular because they offer stability for budgeting and can protect you from market fluctuations. Their downside is that if rates go down, you don’t benefit, and they may come with more penalties if you want to repay your loan early or refinance.Variable LoansVariable loans are loans where the interest rate can change based on prime rate fluctuations.Most variable loans start with an introductory rate (usually a lower rate than comparable fixed rate loans) that remains fixed for 1, 3, or 5 years. After that, the rate will be adjusted to reflect the market roughly every 6 months. While variable loans often start off more affordable and offer borrowers the chance to benefit if interest rates drop, they’re also more volatile and can result in much higher payments if rates go up.Annual Percentage Rate (APR)APR, or annual percentage rate, is the total annual cost of borrowing money on a loan, expressed as a percentage. What’s the difference between interest rate and APR?The APR includes not just interest but also any fees on top of the interest. Many loans have other fees attached to them than just the interest rate, so it’s important to review your APR closely when taking out a loan or credit card.Annual Percentage Yield (APY)APY, or annual percentage yield, is the total annual interest earned on an account. Essentially, APR expresses the total amount you pay for money borrowed in a year, and APY expresses the total amount earned for money loaned, invested, or saved.Who determines interest rates?Banks and lenders determine their individual interest rates based on a variety of factors including: prime rates, the Federal Reserve’s federal funds rate, and the borrower’s unique financial picture.The interest rates available to you individually may go up and down based on market rates, but will also be determined based on things like your credit score, income, and payment history.What causes interest rates to go up and down?Interest rates are tied to broader economic trends. You’ll often hear about the Federal Reserve, or the Fed, setting rates, because the federal funds rate does set the tone for broader prime rates in the U.S. While the Fed is not solely responsible for interest rates, they do tend to adjust their rates up and down based on the economy. The key factors they look at are:InflationEmployment dataGenerally, lower rates mean more borrowing, so the Federal Reserve might adjust rates up to keep inflation in check, or they might lower rates when unemployment is high to stimulate the economy and help create more jobs.How do interest rates affect car payments?Interest rates are reflected in any formal borrowing and lending, including vehicle loans.If you have an auto loan and make a monthly car payment, then you likely have a fixed interest rate loan with a rate based on your downpayment, financial picture, and prime rates at the time you financed your car (plus, in many cases, dealership markups). How to know if market changes mean you could save moneyYou should make sure you know your current loan rate and keep track of market changes. If rates are lower than when you got your financing, you may be able to benefit from refinancing your loan(s).Paying attention to prime rates can help you make money by investing when rates are high and financing or refinancing when rates are low.Other reasons to consider refinancingHowever, federal and prime rate changes are not the only reason to consider refinancing. As well as lower market rates, you may want to look into refinancing if:Your financial picture or credit score has improvedYou financed through a dealershipYour monthly payment is too high and you need more favorable termsYou want to add or remove a co-signerYou want to change your loan terms to pay it off sooner (or later)Refinancing a car loan is a common way to get a better deal and save money on car loan payments.That’s Everything You Need To Know About Interest RatesInterest rates are an integral part of the American economic ecosystem, and understanding them can help you make better financial decisions.Could you benefit from a lower rate on your auto loan?Get your free quote now.

Refinancing a car loan can help you secure better terms and save money on your car payments. But how exactly does it work, and what happens to your old car loan when you refinance?Here’s the short version.The new loan you take out will directly pay off your old loan.When you refinance a car loan, you replace your existing loan with a new loan. Your old loan is replaced by your new loan so you still only have one loan to pay off.In this article, we’ll go over refinancing FAQs, including more detail on what happens to your old car loan when you refinance.FAQS: Refinancing and Your FinancesRead on to get the answers to these common questions about refinancing:What is car loan refinancing? What happens to your old car loan when you refinance?When should you refinance a car?What happens to your credit score when you refinance?What Is Car Loan Refinancing?Refinancing means getting a new loan. The new loan is used to pay off your old loan. That means you get new terms and pay a new lender, instead of the old one.Refinancing is very common, as it is a simple, low-effort way to save money. If you’re not refinancing your vehicle, you’re likely leaving money on the table.What Happens To Your Old Car Loan When You Refinance?When you refinance, you take out a new loan with a new lender. That lender pays off your original loan, and you pay back the new lender instead of the old one, under the new terms set by the new lender.Here are the key things you need to know:Your old loan is paid back in full and the loan is closed out.Once the old loan is paid off by your new lender, you no longer need to make payments on the loan.The new lender handles the actual pay out on the old loan.You should make sure to read everything and check your accounts regularly to ensure you keep making payments until the old loan is paid off and don’t accidentally send a payment on the loan once it’s closed.Pay attention when refinancing so you know when you need to start making payments on the new loan. Depending on the terms of your loan, you may have up to 3 months between your last payment on the old loan and first payment on the new loan, so mark your calendar accordingly!When Should You Refinance A Car?When your credit score has increasedWhen market rates have decreasedWhen you need breathing room in your budgetWhen you want to add or remove a co-signerRefinancing your car loan has a lot of benefits. It can help you lower your monthly payments, lower your interest rate, and even allow you to add or remove a cosigner from your car loan. If any of the following apply to you, it’s time to consider car loan refinancing.Your Credit Score Has IncreasedIf your credit score has increased since you initially financed your car, there’s a good chance you will qualify for a lower car loan annual percentage rate (APR). The car loan APR you are offered will depend on:Your credit scoreYour debt-to-income ratioThe balance of your loanThe market ratesYour credit score is the most important factor in this, so if your score has increased in the months or years since you originally financed, there’s a good chance you can find a lower APR. There are a few reasons why your credit score may have increased since original financing:You paid down some of your debtsYour lines of credit increasedYou made consistent, full, and on time paymentsYou had a negative event expireYou disputed errors on your credit reportWe recommend consistently checking your credit report and credit score to monitor changes. And if your score has increased, you might want to think about refinancing your car loan.The Market Rates Have DecreasedIf the market rates have decreased since your initial financing, there’s a good chance you can secure a lower car loan APR. The APR that you are offered is based on your finances as well as the market rates, so a decrease in market rates can mark a big decrease in your car loan APR.You Could Use Some Breathing RoomWhen you refinance your car loan you can adjust your repayment period. You can shorten your repayment period, which will allow you to pay off your loan faster and save you money overall, although it will make your monthly payments a bit higher. You can also choose to lengthen your repayment period. By lengthening it you are spreading out your payments over a longer period of time. This means that while you will be paying interest for a longer period of time (and therefore spending more money over the course of the loan) you will significantly decrease your monthly payments. You Want To Add Or Remove A CosignerYou may want to add a cosigner onto your loan. Adding a cosigner with a good credit score can help you secure a lower car loan APR. Adding a cosigner on who doesn’t have any credit, such as your child, can help them to build credit. Either way, adding a cosigner is only possible through refinancing. Conversely, you may wish to remove a cosigner from your loan. Again, the only way to adjust and remove a cosigner is to refinance your car loan.What Happens To Your Credit Score When You Refinance?Read on to learn:How credit scores workWhat happens when you apply to refinanceHow refinancing affects your credit scoreHow Credit Scores WorkYour credit score is used by lenders to determine how fiscally responsible you are (and ultimately how likely you are to repay a loan). Your credit score takes five major categories into account:Your payment history. This is the most important category of your credit score and accounts for 35% of your score. This measures if you pay your bills in full and on time. Your amounts owed. This accounts for 30% of your credit score. This looks at how much money you owe compared to how much credit you have available to you. Your credit history length. This accounts for 15% of your credit score and looks at the age of your accounts. A longer credit history with longstanding accounts makes you more favorable to lenders. Your credit mix. This accounts for 10% of your credit score and looks at how healthy your credit mix is. A diverse portfolio with a mix of loans (like mortgage, student loans, and credit cards) shows that you can balance your money over several accounts.Your new credit. This accounts for 10% of your credit score and looks at any new accounts you may have opened and how many inquiries you have on your account. Since the accounts haven’t been around very long, your ability to manage them has not been proven.What Happens When You Apply To RefinanceWhen you are in the process of refinancing, every application you send will trigger a hard inquiry on your credit report. Having a lot of hard inquiries on your credit report may cause even more of a decrease in your credit score. That’s why it’s important to send out all of your applications in a short timeframe. Credit bureaus will give you a fourteen day window to shop around. This means that if you send out all of your applications in that fourteen day time period it will only trigger one hard inquiry on your credit report.How Refinancing Affects Your Credit ScoreWhen you refinance your car loan, two of your credit score categories will be affected: your credit history length and your new credit. Having a new account will shorten your credit history length and show a new account on your report, both of which will cause a dip in your score.But this dip will not last very long–most likely it will affect your score for about a year. And this will pale in comparison to the benefits for refinancing. Refinancing your car loan to make your car loan payments more manageable will actually help your credit score in the long run. Now You Know All About What Happens When You RefinanceTo recap, when you refinance:Your old loan is paid off by a lender, and you pay back that lender in a new loan with new termsRefinancing can lower your monthly payments and/or the amount you’ll pay on the loan overallRefinancing is a common way to change loan terms for various reasons, including to make room in your budget or to add or remove a co-signerWhen you apply to refinance, your new lender will need to perform a hard inquiry on your credit, which will be temporarily reflected in your credit scoreThe resulting dip in your credit score should last roughly 12 monthsIf car loan refinancing seems like the right choice for you, don’t wait any longer! Our experts are ready to help you start saving money. With a 4.7 on TrustPilot, you can feel confident you are in good hands when you choose to refinance with Auto Approve. Get your free, no-commitment quote now.

Can winter damage your car?The short answer is yes. Winter conditions can: reduce your car’s battery life, affect your tire pressure, corrode the parts of your vehicle most exposed to salt, cause damage to suspension and wheel alignment, cause parts of your car to temporarily freeze shut, and more.Depending on where you are and the kind of wintry weather you’re facing, your vehicle may be at risk for a wide range of problems. Read on for a more complete picture of the possible damage winter can do to your car and how best to avoid it.The Complete Guide to Winter Car DamageWinter weather can directly and indirectly do damage to your car.Winter Vehicle Damage Risks By PartWinter may interfere with your vehicle’s:BatteryTiresLocks and handlesWindshield and wipersPaint jobBodySuspensionSpark plugTouchscreensHere’s how, and what you can do about it.1. BatteryBatteries need to use more energy to start and to run in the cold, so your battery life will be shortened when the temperature drops. While a car’s battery is always essential, this is especially a concern for electric vehicles (EVs) that run entirely on battery power, as they’ll have shortened ranges throughout the coldest months.For similar reasons, your vehicle needs more fuel to get running and stay running in the cold, so winter often lowers the gas mileage you get. Be prepared to pay a little extra at the pump and fill up a little more frequently when temperatures drop.It’s good practice to get your battery checked by a mechanic during the winter to make sure you don’t get caught out in the cold with a dead battery. And, if you can park indoors, that can help keep your vehicle from getting as cold, which can help mitigate some of the effects of the cold on your fuel usage and battery.2. TiresWinter weather can affect your tire pressure and traction. Not all tires are conducive to driving in icy conditions.You might remember from school that cold air contracts and hot air expands, and what happens to tires in winter is a real world application of that principle. When the weather changes, you need to be mindful of your tire pressure to ensure your tires aren’t too low – and when things heat up again, you’ll want to remember to adjust accordingly.And that’s not all – the cold can make the rubber on your tires harder, reducing their grippiness. It’s important, if you’re going to be driving in the cold, to make sure you have at least all-season tires on your vehicle. Those who live in colder climates where winter weather is a regular occurrence should strongly consider dedicated winter tires, which are made with a softer rubber to ensure better traction.The damage winter weather does to roads can also mean more risks to your tires, so make sure you check not just the pressure but your tires’ age and treads, and take the time to check for damage after driving through less than ideal conditions.3. Locks and HandlesWhen rain freezes or snow melts and refreezes on your vehicle, the locks and handles can get frozen shut by ice. If you’ve ever lived in a cold climate, you know the annoyance of an iced-over door handle when you’re already running late.Fortunately, there are tailormade de-icing products for this express purpose that you can buy. While some people will use warm water to melt ice off of door locks and handles, adding water can cause additional issues, so it’s best to keep de-icer spray on hand or – even better – use a silicone lubricant ahead of any nasty weather to keep your essential mechanisms from freezing in the first place.4. Windshield and WipersWindshield wipers can get stuck to the window and worn down in the winter, and any existing issues with your windshield can be exacerbated.Windshield wipers are particularly prone to winter-related issues. That’s why you’ll often see them with their arms lifted off the windshield and up when a storm is coming – they can get stuck to the windshield, and unsticking them can be a big headache that can wear down the rubber on the wipers.To combat winter wiper wear, experts suggest making sure you have plenty of wiper fluid, using a high-quality winter fluid with de-icer, and even replacing your standard wipers with special winter wiper blades.As for the windshield, the most common problems that come up during the winter are: cracks and imperfections getting worse because cold causes the glass, like the air in your tires, to contractpeople accidentally cracking or even shattering their windshield by trying to de-ice with hot waterIf your windshield gets icy, use your car’s defrost setting and a plastic ice scraper instead.5. PaintYour vehicle’s paint job can get minor knicks and scratches from the scraping and shoveling that often happens on and around a car during the winter, but the greatest danger to the paint job comes from salt. Salt is corrosive and can damage both your car’s paint job and the body itself. While small imperfections in your paint might seem minor, if they leave your vehicle vulnerable to moisture and rust, they can have long-term consequences. Getting a preventative extra coat of wax or making sure you get touch ups or polishes when issues arise can help bumps and scrapes from becoming rust and corrosion.6. BodyAs with your vehicle’s paint job, your vehicle’s body is most at risk of salt damage in the winter.Road salt makes the roads safer, but it can also be corrosive when left on your vehicle for any length of time. If your vehicle gets pummeled with salt after a storm, make sure to take the time to wash the salt off – including the undercarriage. The extra water exposure from driving over snow and slush, combined with the effects of salt, can also cause rusting, so the best thing you can do is be on high alert for issues with your car’s chassis. If you catch issues quickly, they’re easy to deal with, so wash and check your vehicle at least once a month, and consider a preventative coating if you’re living in an area where winter road conditions last for months.7. SuspensionSudden jolts and impacts from potholes and other road bumps can damage your suspension.While winter might not affect your suspension directly, bad weather and rapid temperature changes can cause cracking and potholes in the road, and snow can make road damage harder to spot. That means it’s important to be extra vigilant for new bumps and dips in the road in the winter and spring.8. Spark PlugOlder spark plugs can struggle in the cold weather months because a stronger spark is needed when the air is colder and they are susceptible to corrosion.A new spark plug should do just fine in the winter, but if you have an aging spark plug, you might find your car gets harder to start as the temperature drops. Idling can also cause carbon build-up, which can also cause spark plug issues over time. 9. TouchscreensTouchscreens are more likely to glitch or freeze when very cold.Liquid crystal display (LCD) screens, which are now common in cars, become slugging when they get too cold. That’s because they quite literally use liquid, and cold liquid simply doesn’t move as fast.To get your screen back into fighting form, you'll simply need to slowly warm it up. For the most part, it shouldn’t be permanently damaged except in extreme cold (below -4° F), but vehicles that rely on touchscreens for essential functions should ideally be parked in a garage during the worst winter weather whenever possible.Want extra cash in hand for winter car maintenance?Refinancing your vehicle with Auto Approve could help you save you thousands.Get a free, no-commitment quote to see how much you could save.How To Avoid Winter Damage To Your CarHere are 9 things to do – and one don’t – if you want to keep your car in tip top shape through the colder months.Do park in a garage when you have the option.Do get your vehicle serviced for winter, especially if you’re unsure about your vehicle’s winter readiness.Do wash your car when it’s been exposed to a lot of salt, and consider getting an extra coat of wax to help protect your paint and chassis.Do use an ice scraper, not your windshield wipers (and never hot water!), to get snow and ice off the windshield.Do check your tire pressure as temperatures change.Do go over winter driving best practices so you’re ready for any challenges rough roads might bring, from black ice to pot holes.Do make sure you have plenty of coolant.Do get your vehicle’s battery load tested – or pay attention to the range indicator, for EVs.Do keep a winter emergency kit in your car.Don’t run your car more than you need to – it’s a myth that you need to start your car every day, starting it from cold will cause more wear and tear than leaving it a few days, just check to make sure you’re not getting snowed in or iced out by frozen handles and locks.The short version is: an ounce of prevention is worth a pound of cure. Anything you can do to prepare your car for winter’s challenges before you start seeing signs of wear and tear will save you money and time in the long run.That’s Your Guide To How Winter Damages CarsNow you know what to do, what not to do, and what to watch out for this winter.But what if it’s too late?If the winter weather’s caused damage that needs fixing, you might find yourself trying to squeeze maintenance into your budget.Fortunately, most people can save money by refinancing their vehicle.When you refinance with Auto Approve, you get guidance from a dedicated expert to make sure you get the best deal for you.Get a free quote now.

If you have ever applied for a loan, you have likely come across the idea of a debt-to-income ratio. But what is a debt-to-income ratio, and why is it so important?Here’s a quick overview:Your debt-to-income ratio (or DTI) is all your monthly debt payments owed divided by your gross income. It matters because it’s one of the key things that a lender will look at when determining whether or not to approve your loan. Many lenders prefer applicants with a DTI below 36% and may refuse to lend to someone with a ratio over 43%. Read on for a more in-depth explanation.Your Guide To Debt-To-Income Ratio And Why It’s So ImportantIn this article, you’ll learn:How a debt-to-income ratio (DTI) is calculatedFront end and back end ratiosWhat’s considered a good DTIWhy it mattersStrategies for reducing a high debt-to-income ratioHow Is Debt-To-Income Ratio Calculated?Your DTI is simple enough to calculate: you’ll need to add up all the payments you have to make in a given month on debt (like car loans, student loans, and mortgages) and divide them by your gross monthly income: the amount you make in a month before any deductions (like taxes) are taken out.So, for example, let’s say you pay $200 on your car, $600 on your mortgage, and $150 on credit card debt every month, and you’re making $5,000 a month before deductions. Here’s what the calculation would look like:($200 + $600 + $150) ÷ $5000 = $950 ÷ $5000= 0.19 x 100 = 19%  You would have a debt-to-income ratio of 19%.How To Calculate Your Own Debt-To-Income RatioIf you want to calculate your debt-to-income ratio, you first need to add up all of your monthly expenses. Some examples include:Mortgage paymentsInsurance paymentsCredit card minimumsCar paymentsStudent loan paymentsPersonal loan paymentsOnce you have your total expenses calculated, divide that number by your monthly gross income – your income before taxes and other deductions. That number is your DTI. You can find this by taking your annual pre-withholding salary and dividing it by 12. If you’re not totally sure what your gross is, you can find it on a recent paycheck.Let’s look at another example.Let’s say your monthly expenses are as follows:Mortgage payment: $3000Credit card minimums: $150Car payments: $400Student loan payments: $600Personal loan payments: $300Your total monthly debt adds up to be $4,450. If your monthly income is $13,000, then your DTI is 34%.Note that this calculation includes your minimum credit card payments, not your credit card balance or any other variable expenses, like groceries. In other words, this ratio gives lenders a good idea of what your basic monthly expenses are, but it's not necessarily a good indication of what you can afford. Qualifying for a $40,000 car loan does not mean that you can necessarily afford the payments.Front end and back end ratios: what’s the difference?There are two components of your debt-to-income ratio that lenders will consider, your front end ratio and your back end ratio.The calculations above give you an idea of your back end ratio. The back end ratio looks at your income compared to all of your monthly expenses, including your mortgage and other housing expenses. It also includes your student loans, credit cards, car loans, and any other expenses you may have.Your front end ratio, also called the housing ratio, looks at your income compared specifically to your housing expenses. These expenses include your monthly mortgage payment, property taxes, homeowners insurance and any homeowners association fees you may be required to pay.Combining these gives lenders a fuller picture of your finances. The combined DTI numbers show lenders how you handle your debt and how able you are to pay back your debts. Why Is Debt-To-Income Ratio So Important?The higher your debt-to-income ratio (DTI) ratio is, the riskier the loan is perceived to be, and the less likely a lender will approve you for a loan. That’s why lenders care so much about it. If you’re carrying a lot of debt or your income isn’t enough to cover the debt you have, the more likely it is that you might miss payments.What Is Considered A Good Debt-To-Income Ratio?While the specific numbers will vary from lender to lender, generally, to have a good debt-to-income ratio (DTI), you should aim to have: a front end debt-to-income ratio below 28% – this means that all of your housing expenses take up less than 28% of your monthly income. a back end debt-to-income ratio below 36% – this means that all of your expenses, including housing, take up less than 36% of your monthly income.However, all lenders have different requirements, and your DTI is not the only factor they will be considering.If you have an excellent credit score but a slightly higher DTI, a lender might not view you as a risky candidate. If you have a higher DTI, you might not qualify for as low of an APR. Some conventional loans, like Fannie Mae, accept loan applicants with ratios as high as 50%. That said, the lower your DTI ratio is, the more likely it is that you’ll get a favorable loan.How Can I Reduce My Debt-To-Income Ratio?If your debt-to-income ratio is higher than you would like, there are a few things you can do to lower your ratio:Create a budgetBuild a debt payback strategyRefinance your loansAvoid new debtIncrease your incomeCreate A BudgetTo make sure you’re spending within your means, take the time to map out a realistic and easy to track budget. Take a detailed inventory of all of your expenses, from the boxed meal prep kit you got talked into to the electricity bill that keeps ticking higher and higher. Only when you look at all of your expenses listed out will you see how much you are truly spending. Compare your expenses to your income to see how it is measuring up. Are your expenses outpacing your income, or are you able to save a bit each month? If you have extra money every month, you should prioritize starting an emergency fund (if you don’t already have that). After that, look to allocate extra money to your debts. Look for ways to cut down on your spending – any money you save can be used to pay down your debts.Creating a budget can be difficult, so it’s important to attach goals to your budget to help keep yourself motivated. It can also be helpful to tell a friend or loved one about your budget so that you will have someone else to hold you accountable.Strategize How You’ll Pay Off Your DebtTo reduce your debt-to-income ratio, you need to shrink your debt or increase your income – ideally both.There are a lot of different ways that you can go about paying off your debt. Here are a few different strategies to consider:The Snowball Method. Pay down your smallest credit balance first while only making minimum payments on the others. Once you pay off the smallest one, go to the next smallest and pay that one down while making only minimum payments on the others. Repeat until you have paid off all of your debt.The Avalanche Method. Focus on the accounts with the highest interest rates first. If you have three loans with respective interest rates of 18%, 13%, and 8%, prioritize paying down the first loan while making minimums on the others. When that one is paid off, move on to the second loan, and so on, until all of your debt is gone..Debt Consolidation. Another option is to use a debt consolidation service to move all of your debt to one account, and make payments on that. This will depend on what types of loans you have and what interest rates you can secure.There are some other simpler methods for paying off debt as well. These include:Paying an additional amount above the minimum on every balance every month.Making an extra payment every few months.Getting a balance transfer credit card.Refinance Your LoansRefinancing your car loan or mortgage can help you reduce your DTI by helping you reduce how much you owe monthly, by reducing the total due across the life of the loan, or both.When you refinance, you will be able to change your repayment period on the loan. For instance, instead of a 48 month car loan you can refinance to a 36 month car loan. This means you will be paying your debt off at a faster rate, reducing your DTI at a faster rate. Shortening your repayment period often comes with lower car loan APRs as well. Your monthly payments will be a bit higher, but if you can afford that adjustment it will greatly help your DTI and credit score in the long run.If your credit score has improved since you initially financed your car or your home, or if the market rates have decreased since you initially financed, you may qualify for a significantly lower APR. This can save you money you can use to pay off other debts.Avoid Taking On New DebtThis may sound obvious, but try your best to avoid getting into more debt. Limit your purchases, resist opening new lines of credit, and avoid any major purchases. It may be easier said than done, but avoiding add to your debt is crucial for your financial well-being.Look To Increase Your IncomeIf you feel like you are in the weeds when it comes to your debt, you can also shrink your debt-to-income ratio by increasing your income. Consider looking for a side job or taking on more hours at work, if available to you. Whatever your situation is, finding a way for your income to outpace your expenses is key. Many people find that, at a certain point, it’s easier to increase income than trim expenses.That’s Everything You Need To Know About Your Debt-To-Income-Ratio And Why It’s So Important.Applying for a new loan can be stressful, so it’s important to be as prepared as possible. One way to prepare for your application is to calculate your DTI to see how you stack up. If your DTI ratio is above 36%, you may have a more difficult time finding a lender. If you are able to delay the process, devote your time and energy to reducing your DTI ratio. This will most likely cause your credit score to increase as well. This will make you a much more desirable loan candidate as you move forward.Refinancing your car loan is a great way to help lower your debt-to-income ratio and increase your credit score.Read up to find out if refinancing your auto loan makes sense for you, or get a free, no-commitment quote and chat with one of our refinance experts to find out how much you might be able to save.Get started right now!

If you are wondering how to get out of a car lease early, there are three main options to consider: transfer the lease, return the car, or buy the car.Which you choose will depend on the details of your lease, the vehicle, and your finances.Read on to learn about each option, how it works, and why someone might choose or avoid it.Ending Your Car Lease Early: The Complete GuideIn this article, we’ll look at:Reasons to end a car lease earlyTransferring a car leaseWays to terminate your car lease Considerations for buying out a leaseWhat you need to know to get a lease buyout loanWhy end a car lease early?There are a number of reasons why you might want to get out of your car lease early. For example: You just lost your job, and the payments are too much to keep upThe vehicle you leased isn’t fitting your needs anymoreYou want to be done with leasing and simply own your car outrightYou’re worried about excess mileage feesThese are all valid reasons, and they’re not the only reasons. Plans change, things happen, and unexpected events can throw us totally off-course from what we thought we needed in our daily lives. When it comes to the terms of your auto agreement, a lease might have seemed like a good solution at one point; yet, due to circumstances out of your control, being in a car lease no longer makes sense for you.Fortunately, tons of people find themselves in a similar predicament each year, which is why it’s not uncommon to want to learn how to get out of a car lease contract early.Still confused? Here are a couple frequently asked questions about reasons to end your car lease before it’s up.What are excess mileage fees?When you get a lease, it often includes a maximum number of miles you’re allowed to drive per year. If you stay under that mileage, some lenders will give a small refund for preserving the car. If you go over it, however, you’ll get charged a fee per mile, payable at the end of the lease. This is because the mileage affects the value and wear and tear of the car.For example, let’s say you had a 3 year lease with a maximum annual mileage of 12,000 miles at a rate of $0.25 per mile over the limit, and you average 14,000 miles per year.You would be 2,000 miles over every year for three years, so you would owe:(2,000 x 3) x $0.25 = $1,500.00$1,500 at the end of the lease. It can really add up!Many people buy out their leases to avoid these excess mileage fees. That’s been especially true in the past several years, since used car values increased during the pandemic and have stayed elevated. This may make your current vehicle’s value higher than the dealer thought it would be at the time the lease was signed.Is it a good idea to get out of a car lease prematurely?That really depends on your unique situation. In many cases, people choose it because they feel they have no other choice. Figuring out how to get out of a car lease agreement early can be a costly and lengthy process. However, if the cons of staying in your lease outweigh the costs and challenges of getting rid of it, then it makes sense to stay the course.If you have decided that you need to make a move and get out of your lease, make sure you really take time to weigh your options, and don’t agree to anything without hearing the final numbers on what you’ll owe or receive. Don’t be afraid to demand hard numbers from your leasing company: it’s a service they owe you as your lessee. So, with all that under consideration, how do you get out of a car lease early?Options for ending a car lease earlyThe short version is, you can do one of three things:Return your vehicleTransfer your leaseBuy your vehicleLet’s break down each option.Return your vehicleThe simplest way to get out of a lease early is to terminate the lease agreement and return the car. However, this is also often the most costly option. When you terminate a lease early, you may be responsible for all or some of the following expenses:early lease termination feeremaining payments on your vehicleany costs related to resaletaxes associated with leasingnegative equity between your lease and the current market valuestorage and transportation of your vehicleSince a car’s value typically depreciates more upfront, the earlier you terminate the lease, the higher the cost is going to be on your end. In many cases, the termination cost may be so high that it makes more sense for you to complete the lease as agreed upon. Remember that the Consumer Leasing Act does mandate that all of these details are included and available for you to review in the lease you have on record.Early lease termination feeEarly lease termination fees vary widely from lease to lease. They are often based on a sliding scale, making it more burdensome to pay off the earlier you are in your lease. For example, if you terminate your lease in the first year, you may be required to make three additional monthly payments, whereas if you terminate your lease in the second year you may only be required to make two additional payments. Review your lease agreement thoroughly to determine your responsibility.Remaining payments on your vehicleYou may be required to pay some or even all of the remaining payments on your vehicle. This is potentially the most expensive part of exiting a lease early. If you decide to terminate your lease with 18 months left on your contract and your monthly payments are $300, you may be on the hook for $5,400 in addition to the other fees associated with termination. Any costs related to resaleLease agreements typically require you to pay a disposition fee, which covers any costs associated with reselling the car. This could include getting the car thoroughly washed and detailed, fixing any cosmetic dings, and performing any necessary maintenance. This can range from a few hundred to a few thousand dollars depending on the terms of your lease and the condition of your car. Taxes associated with leasingIf there are any additional taxes associated with the lease, you will be required to pay those. These costs vary greatly from state to state so you’ll want to make sure you know how much you’ll owe in taxes before making any decisions.Negative equity between your lease and the current market valueNegative equity is when you owe more than something is worth. This is also referred to as being “upside-down” or “underwater” on a loan. When it comes to a lease, it means that your monthly payments are not paying down the balance of the lease faster than the car is depreciating. Your lease agreement might require you to pay some or all of this difference in the car’s value.Storage and transportation of your vehicleAny costs related to the physical removal and storage of your vehicle will be your responsibility to pay.As you can see, all of the lease termination fees often make this the most expensive and least practical way to get out of a lease early, though it is definitely the most straightforward. Transfer the leaseA very popular option to get out of a lease early is to transfer your lease to another person. It is important to look at your lease agreement, however, as not all leases permit a third party transfer.Websites such as leasetrader.com and swapalease.com can help match you with someone looking to take over a lease. However, you must ensure that it is legal to do so in your state. The new lessee must also meet the lender’s requirements. If you are able to transfer the lease, you will most likely be held responsible if the third party stops making payments. You will also be required to pay any transfer fees, which can range from $500 to several thousands of dollars. It is common to offer incentives for people to take over your lease as well. An extra $500 to anyone willing to take over your lease might convince someone who is on the fence about whether taking over your lease is a good move. This option may be less expensive than returning your car early, but will still come with hidden fees, like the lease transfer fee and other costs that will pop up. You should do your due diligence and make sure you have a full tally of all associated costs before choosing to transfer your lease. Be sure to compare the costs between a lease transfer, early termination, and lease buyout before making any final decisions.Buy the carSometimes the most financially beneficial way to end a lease early is to buy the car from the lender. If you have the capital to do this outright, you can simply buy the car and pay for any associated fees. If you do not have that amount of cash on hand, you can opt for a car lease buyout loan. Depending upon the details of your vehicle and loan, buying out your vehicle entirely may be you best option for early termination. Yes, there are still fees involved, but it’s worth running the numbers to compare this option against the others. Many people who need or want to get out of their car lease option pick buying their vehicle outright (or getting financing to do so) because, unlike the other options, you get to keep the car at the end of the process. This means that you can either keep and use the vehicle or resell it, recouping some of the costs involved.Let’s take a closer look at how buying your leased vehicle works.How to buy your car from your lease agreementDetermine your car’s valueCheck for excess mileage, wear and tear, and disposition feesObtain a lease buyout loan, if necessaryDetermining your car’s valueEvery car lease has a residual value that is listed in the loan agreement. The residual value of a car is based on your car’s expected depreciation over the life of your loan and is predetermined by the leasing company. It is usually non-negotiable. This is the number that you are bound to should you choose to buy your car.It is important to also look at your car’s market value. This is based on the demand for your car, and will give you an idea of how much you can get if you resell the car. It is important to know what the market value is of your car to determine if it makes sense to purchase it. If the residual value of your car is $13,000, but the market value is $11,000, it would mean that you are paying $2,000 more than what your car is worth. Consider these values and determine if a car lease buyout makes sense for you. Maybe you want to keep the car for yourself and you are comfortable with paying for the residual value. Or maybe you want to resell the car, and you will still make money on the transaction based on the market value of the car. Other considerations for buying out your leaseBuying your car from your lender can release you from fees that you might otherwise have to pay. Leases often include charges or penalties for the following:Excessive mileage. Most leases have yearly mileage limits, and if you exceed that mileage amount, you can be paying huge penalties. These penalties can range from $.10 a mile to $.30 a mile, which can add up to several thousands of dollars if you drive a lot. Wear and tear. When your car is turned in after your lease is over, it is subject to inspection. Dealers will charge you for any external dents, stains to the interior, and anything else they think will hurt resale value. These fees can vary greatly depending on the condition of your car.Disposition fees. Dealers will usually charge you a disposition fee, which covers all costs associated with reselling your car. Think of all of these fees as money that can be put towards buying your car from your lease. If the fees add up to $3,000, it might make sense to take that $3,000 and use it to invest in the purchase. It is always a good idea to call your lender directly and find out exactly how much it will cost you to buy your car from your lease. To obtain a lease buyout loan:Call your existing lease company.Shop around for rates. Call your existing lease company, again. Sign the papers and notify your insurance company.Keep or sell your vehicle. If you’ve done the math and determined that buying out your lease is the best way to terminate your lease early, you may need to obtain a lease buyout loan. Not all lenders offer this type of loan, but at Auto Approve we work closely with lenders that provide these loans and will work with you to find your best rate possible. To get a lease buyout loan, you will need to take the following steps:Call your existing lease company. First, find out how much it will cost to buy your car. Tell them you are looking to buy out your lease and see if they provide that service.Shop around for rates. At AutoApprove we can jump start this process for you and help you start comparing rates.Call your existing lease company, again. Give them a chance to beat any competing rates that you may have found.Sign the papers and notify your insurance company. Make sure all of the necessary papers are signed, and tell your insurance company about the new lender. Since you will no longer have a lease, you may be able to reduce your coverage and your monthly payments, as you will no longer be required to have high liability coverage.Keep it or sell it. Now that the vehicle is yours, you can decide if it’s worth keeping it, or selling it and keeping the profit.Now You Know How To Get Out of a Vehicle Lease EarlyIt is not always easy to get out of a lease early, but there are options available to thos ewho want or need to do so. The best option for you will depend on your unique situation, but it rarely makes sense to terminate the lease outright. Finding a third party lessee or securing a buyout loan is the most beneficial option for most lessees. The worst thing you can do is agree to one of these options without knowing the final financial figures, so be sure to do your research.And if you are interested in obtaining a car lease buyout loan, get in touch Auto Approve today to get more information on how our experts can help you navigate the process and find a great deal from one of our trusted lenders.Get in touch today.

How do you transfer a car loan? Is it even possible to transfer a car loan to another person? The short answer is: not usually. However, there are certain situations where a lender may allow it. For example, if you’re moving to another country, are in a personal financial crisis, or are giving the car to another person as a gift.Here’s what you need to know about transferring your car loan and how you can decide what to do if you can’t afford your monthly car payment.The Complete Guide to Vehicle Loan TransfersWith the cost of insurance, gas, and maintenance, owning a car is incredibly expensive. But if your monthly payments are getting too high, what can you do? Is it possible to transfer your car loan to another person and walk away? In this guide, we’ll look at: if and when a car loan can be transferred to someone else, how to make it happen, associated fees, and other options for borrowers looking to get some relief from their monthly auto loan payment.So, Can You Transfer A Car Loan?There are some situations where a lender may agree to transferring a car loan. It will depend on the language of your loan contract and there may be fees associated with it. Situations where a transfer may be allowed:You are moving overseas and do not have the time to sell your car properly.You are in a very tight financial spot and need to get out of your loan agreement immediately. You are giving the car as a gift.Your car loan will have language in it that pertains to transferring your loan. If your car loan is “assumable”, then it can probably be transferred to another person. But if you are unsure of the language in your contract, be sure to contact your lender and explain your situation. Why Is Transferring a Car Loan So Difficult?The terms of a car loan are based on a number of factors, and perhaps the biggest factor is the financial situation of the applicant. Better terms, conditions, and car loan annual percentage rates (APRs) are offered to people who have a good history of making on time payments. The better your credit score and credit history is, the better your loan terms will be. Transferring a loan to someone else means that they will assume the exact loan and loan terms that you have, even if they have a drastically different financial history than you. If their financial situation is worse than yours, then the lender is taking on a greater risk without any compensation. If their financial situation is better than yours, then they are getting unfavorable terms. What Typically Happens Instead of Transferring The Loan?When you sell a car that is still being financed, a lender will instead look at the new borrower’s information and make a loan offer based on that. They will issue a new loan that is separate from your agreement entirely. How To Transfer A Car LoanIf, for whatever reason, your specific circumstance means transferring your car loan makes the most sense, you’ll need to:Discuss the transfer with your lender.Have the new borrower apply. Transfer the loan and the title.1. Discuss The Transfer With Your Lender.If you are allowed to transfer your car loan (and even if you aren’t allowed), your first step is to call up your lender and discuss your situation. If there is language in your loan terms that excludes it, you may still be able to talk them into it. The worst they can do is say no. If your loan is assumable, there will be conditions of the transfer. 2. Have The New Borrower Apply. The new borrower will have to meet their minimum credit score and any other criteria that the lender may have in place. The lender will review their application and determine if they will allow the transfer. 3. Transfer The Loan And The Title.When all of the paperwork is done, the lender can formally transfer the loan and you will need to transfer the car’s title. You should visit your state’s Department of Motor Vehicle to determine what you will need to do this. Typically you will need to have the bill of sale, registration, and money for the transfer fee. Be sure to transfer the title as soon as you can to avoid any problems. Contact your insurance company as well to remove the car from your policy and have the new owner insure the car themselves.What Fees Are Associated With A Car Loan Transfer?If you are allowed to transfer your car loan, there will be additional fees. The new borrower will most likely be responsible for them, but they may include:Application feeTransaction feesClosing feesFees for missed or late paymentsRegistration fee (for the new borrower to register with the state)Can I Transfer My Car Loan To A Credit Card?While you may find that you can transfer your balance to a credit card, it is not recommended. If you are offered a 0% introductory APR for a credit card, you may wonder if you can transfer your loan balance to your credit card and save on interest. A card might offer you a low APR and cash back, both of which sound appealing when money is tight. However, while this may be a viable option for some exceptionally financially responsible people, there is a significant disadvantage: missing a payment can be catastrophic. A missed or late payment could result in a skyrocketing APR that will put you in a much worse position than you were in previously. Refinancing your car loan is a safer option that does not come with the risk of a missed credit card payment.What Should I Do If I Can’t Transfer My Car Loan?If you are unable to transfer your car loan to another person, there are other steps you can take to get yourself into a situation that works better for you.1. Contact Your Lender And Ask For A Deferment.If you’re hoping to get rid of your loan because of financial difficulties, you may want to look into a deferment. Deferring your payments for a few months will pause your loan and allow you to catch up. It’s important to keep in mind that you will still accrue interest during this time, but it’s an easy and temporary way to get out of a tight spot. 2. Refinance Your Car Loan.Perhaps the most straightforward way to deal with high monthly car payments or a loan with terms that don’t work for you is to refinance your car loan. Refinancing is when you take out a new loan with better terms and conditions that will replace your current car loan. Refinancing may help you get a lower car loan APR and can help you change your repayment period. If you lengthen your repayment period you will have more time to pay off your loan and will greatly reduce your monthly payment. This can be a great option for many people who are struggling and need a little more wiggle room. Refinancing your car loan is easy, especially if you use a company like Auto Approve (that’s us!) that specializes in car loan refinancing. We have relationships with lenders that will help you to get the best car loan possible and experts to help guide you through the refinance process.3. Add A Cosigner.If you want someone else to be responsible for the car and the loan alongside you, consider adding a cosigner. You will both be equally responsible for the loan. This might be a good option if you want to take the car back in a little while and assume sole responsibility. You will still need to refinance the loan to add a cosigner, but adding a cosigner may actually help you get a better car loan APR and better terms and conditions. When you apply for a refinance with a cosigner the lender will consider both of your finances and credit histories. So if your loved one has a better credit score than you it may help you secure a better rate. 4. Trade Your Car In.If your car payments are decidedly too much money every month, another good option might be to trade your car in. If you trade your car in and get a cheaper car you will lower your car payments and still have a dependable mode of transportation. 5. Try Leasing Instead.Financing a car is significantly more expensive than leasing a car. While financing a car is great because it builds equity, leasing will allow you to have a dependable car for much less money every month. Trading your car in and leasing instead can help you pay for any fees and help reduce your payments further.6. Sell Your Car.If you lost your job or have had another significant life change, it might be best to sell your car and figure out a different mode of transportation. If things are especially difficult, refinancing your car loan may not be enough to put your finances in order. Perhaps you can try depending on public transportation for a little while, or carpooling with friends, family, neighbors, or co-workers until your situation gets sorted out. That’s Everything You Need To Know About Transferring Your Car Loan.Transferring an auto loan may be allowed in certain situations, but it is not widely offered or practiced. Instead, consider selling your car to another person or refinancing your loan with or without a cosigner. These solutions are much more likely to help you reach your end goal and reduce your monthly payments. If car loan refinance sounds good to you, find out how much you could save by getting a quote from Auto Approve today!Get your free, no-commitment quote in just a few minutes.