There are a lot of benefits to refinancing your car. And the process is actually pretty simple. It can typically be done in a day, and the benefits can be long lasting. But what should you do to prepare for your car loan refinance, and how can you get the best rates possible?
Before you start the refinance process, be sure to ask yourself if refinancing your car loan is worth it. After all, if your car loan has a good APR and your repayment terms are working for you, it might not make sense to refinance.
To determine if refinancing is worth it, ask yourself the following questions:
Has my credit score improved since my initial financing?
Have the market rates dropped since my initial financing?
Am I having trouble making my monthly payments?
Do I want to add or remove a cosigner?
If you answered yes to any of these questions, it might be a good time to consider refinancing your car loan.
Your credit score is the biggest factor in the car loan APR that you will be offered. So if you know that your credit score has improved since your initial financing, there is a good chance that you will qualify for a better APR. And that can add up to a lot of money in savings.
Similarly, if the market rates have decreased since your initial financing, there’s a good chance that you will qualify for a lower APR.
If you are having trouble making your monthly car loan payments, auto refinance may be a great option to lower your monthly payments. If you are able to refinance to a lower APR your payments will be lower every month and save you money overall. But even if you don’t qualify for a lower car loan APR, an auto refinance allows you to change your repayment period. Lengthening your repayment period can significantly reduce your monthly payments (although you will end up spending more over the length of your loan).
If you would like to either add or remove a cosigner on your loan, refinancing is the best way to do this. Maybe you have a cosigner on the loan because you were going through a rough financial time and needed a little boost on your application. Removing them will require you to restart your loan entirely.
On the other hand if you are interested in refinancing but don’t have a stellar credit score, refinancing your car loan with a cosigner can get you a better car loan APR and better repayment terms.
In order to determine if it’s worth it to refinance you should review your current loan. First up, you will have to make sure that your current loan is eligible for auto refinance. Most lenders have a minimum amount that you will have to borrow so if your loan is near the end of repayment you may not qualify.
Additionally you will want to know your current rate, monthly payment, and repayment period. This will help you determine what you can expect from your auto refinance. Be sure to read through any fine print to determine whether or not there are prepayment penalties. Sometimes these penalties will outweigh any savings that vehicle refinance may provide, so you want to be sure you do the math ahead of time.
As we mentioned before, your credit score is the biggest factor that lenders will look at when considering whether or not to offer you financing. Because of this, you want to prepare your score as much as possible and ensure that your score is in good shape. There are several steps you can take to ensure your score is in the best shape possible:
Make full, on time, consistent payments to all of your accounts.
Enroll in autopay for your bills if possible.
Resist opening any other new lines of credit.
Request higher credit limits on your accounts.
Pay off debts that have a high credit utilization ratio first.
Request a copy of your credit report and review it for errors.
If you have a less than stellar credit score, you may still be able to get an auto refinance loan. But the better your score is, the better the car loan APR and repayment terms will be, so it’s a good idea to take the time to improve your score before applying. The best car loan refinance rates are reserved for those with good and excellent credit scores, typically above 750. The higher your score is, the better your car loan APR will be.
It’s important to understand exactly what your goal is with refinancing. Do you simply want to have lower monthly payments? Do you want to save money overall during the life of the loan? Knowing what your goal is will help you when deciding which loan is right for you.
If you want to have lower monthly payments, a lower interest rate and/or lengthening your repayment period will help. If you want to save money overall, a lower interest rate and/or shortening your repayment period will help.
You should take into account the current value of your car when deciding what is a good option for you too. Going to Kelley Blue Book or Edmunds and seeing your car’s value will help you compare it to the amount you have left on your loan. If you owe more on your car than the car is worth, you will most likely have a hard time refinancing (this means your car is underwater).
It’s good to have all of your ducks in a row before you start applying for auto refinance. Getting your paperwork gathered and scanned will help you apply quickly and easily.
Requirements will vary from lender to lender, but typically all lenders require the following documents:
Proof of identity. This may include a driver’s license or passport.
Proof of income. This may include W-2s or your most recent pay stubs
Proof of residency. This may include a recent utility bill, your lease agreement, monthly mortgage statement or tax bill.
Proof of insurance. A recent monthly statement or insurance card should suffice.
Information about your existing loan. They will want to know your balance, interest rate, loan term and monthly payment.
Details about your vehicle. The year, make, model, mileage and vehicle identification number will all be required.
The exact requirements may vary from lender to lender, but this will give you a good idea of what you will need and help you to get a head start with your applications. Having all of this information ready to go will make applying for auto refinance super easy.
Refinancing your car is super easy when you use a company that specializes in auto refinance. Not only will they be able to walk you through the process, but they will have relationships with lenders across the country (which means you will have the best chance at securing good terms.)
Using Auto Approve will make refinancing your car loan a cinch. There are so many benefits to using Auto Approve, including:
Fast turn-around time
Personalized service
GAP insurance available
Large network of competitive lenders
Vehicle protection plans that can be bundled
And more
Our customers love us, but you don't just have to take our word for it. We have an A+ rating from the Better Business Bureau, a 96% would-recommended rating on Lending Tree, and a 4.7 out of 5 star rating on TrustPilot. With ratings like that, you know you can trust Auto Approve to get you the best refinance rates and make the process as easy as possible.
When you use a company that specializes in refinance, they can help you with the following:
Determine if your loan is eligible for car loan refinance
Help you with your car loan refinance applications
Shop around for the best rates and terms
Guide you through picking the best car refinance loan
Help you cross the “t”s and dot the “i”s with your new loan
Coordinate paperwork and repayment for your original loan
Calling in a company that specializes in refinance can take a lot of things off of your plate and simplify the process a lot.
Refinancing your car loan is easy when you follow these tips. It’s even easier if you use Auto Approve to handle your refinance for you. It takes just a few minutes to get started (and you don’t even need to provide your social security number to determine whether or not you qualify).
So don’t wait to see how much money you could be saving, get in touch with Auto Approve today!