There is a ton of information out there about refinancing your car. And while there is a lot to unpack, it’s actually pretty simple. Today we are talking about the most important facts of auto refinance.
When you refinance your car, the timing is incredibly important. It is important in terms of how far along you are in your original loan, and in terms of timing with the market.
It’s really important to consider how much time you have left on your original loan if and when you decide to refinance your car loan. If you just bought your car and your loan is less than six months old, you should consider holding off on car refinancing. Experts recommend waiting about a year before you refinance–this gives your credit score a chance to recover from the hard inquiries of your initial loan request (which will result in the best car loan APR possible)
If you have less than two years left on your original loan, it is probably not a great time to finance your car. Most lenders will not consider your application. But if you do find a lender that is willing to refinance your loan, it will most likely not be very worthwhile for you. Car loans are front-loaded amortized loans, which means that you pay most of the interest at the beginning of the loan and most of the principal towards the end of the loan. So the closer you get to the end of your loan, the less interest you are on the hook for.
The car loan APR that you are offered will depend heavily on the prevailing market rate for car loans. You want to refinance your car when market rates are low (like right now) and before they inevitably rise again (which they will).
The time is right to refinance your car when:
The time is not right to refinance your car when:
Your credit score is the most important factor that is within your control when it comes to refinancing your car. Your credit score is determined based on five major factors.
All of these factors are used to calculate your credit score. This score indicates to lenders a person’s capacity to repay a loan. The number is between 300–850 and indicates a consumer's creditworthiness. The higher the score, the more likely a person is deemed to pay back their loan. Your credit scores are defined along the following categories:
Higher credit scores will make you more likely to get a better car refinancing rate and better refinancing terms. The best rates and terms are reserved for people with Prime and Super Prime scores. Which is why it’s really important to focus on increasing your credit score before you apply to refinance your car. Here are the top ways to increase your credit score:
Commit to increasing your credit score before applying to refinance your car. It can save you a lot of money!
There are a lot of places where you can refinance your car. Traditional banks, car dealerships, credit unions, online lenders–it can be truly overwhelming. That’s why your best bet when it comes to refinance is to use a company that specializes in car refinancing, like Auto Approve. Auto Approve has relationships with lenders all across the country, so they get you the best deals possible and eliminate a lot of the legwork for you. When all you do is car refinance, it means that you know all of the ins and outs of the industry and can find the best rates and deals for your customers.
With a 4.7 out of 5 star review on TrustPilot, an A + rating from the Better Business Bureau, and a 96% would-recommend rating on Lending Tree, we’re pretty sure our customers are glad they trusted Auto Approve.
Using a company that specializes in auto refinance can eliminate a lot of the noise for you. They can answer your questions (and even help you with the paperwork!). So get in touch with Auto Approve today to get the ball rolling and start saving money today!