We could all use a break now and then, especially when it comes to our bills. So it may come as a relief to hear that there is a way you can skip 90 days of car payments. That’s three whole months without a car payment looming over your shoulder.
And the best news is it's simple. All you have to do is refinance your car with a lender that offers 90 days without payments.
Refinancing your car loan can get you 90 days with no car payments.
What is car loan refinancing?
Car loan refinancing is when you pay off an existing loan with a new loan. By securing a new loan that has a better car loan APR and better terms, you can save a lot of money.
There are a lot of lenders that will refinance your car loan, from credit unions to traditional banks to online lenders. With so many options, it’s usually a good idea to use a company that specializes in car loan refinance. This will help you to weed through all of the competition and find the best rates available.
There are a number of lenders that will offer no payments for 90 days as a perk. This can be helpful if you could use some time to get your finances in order, or just give you a break with monthly payments.
When is a good time to refinance my car?
When Your Credit Score Has Increased
Your credit score is the main consideration that lenders look at when determining what car loan APR they will assign to you. If your credit score has increased, you will most likely qualify for a lower car loan APR.
Your credit score is determined by a number of financial factors. The following information is used to calculate your credit score:
- Payment History (35% of your credit score) This shows lenders if you pay your bills on time and in full. This will also show missed payments and any bankruptcy details.
- Accounts Owed (30% of your credit score) This category looks at how much money you owe compared to how much credit you have available to you (your credit utilization ratio). The lower your debt to credit ratio is, the higher your score will be. You should aim for this number to be below 30%.
- Length of Credit History (15% of your credit score) This looks at the age of your accounts. The longer you have had credit, the higher your score will be.
- Credit Mix (10% of your credit score) This looks at the types of accounts you have. Do you have a healthy mix of credit cards, loans, mortgages, etc? Having a balanced mix of credit accounts will show lenders that you can handle your finances over multiple accounts.
- New Credit (10% of your credit score) New credit will lower your score a bit. This is because your history with this new credit isn’t reflected in your score yet, so it’s essentially an unknown account.
The two most important and impactful categories are your payment history and your accounts owed. This means that any changes to those areas can cause a significant swing to your credit score.
There are a few reasons your credit score may have increased since your initial financing.
- You paid down some of your debt
- Your credit limits have increased
- You have been making consistent, on time, full payments
- A negative event, like bankruptcy or eviction, has expired
- A hard inquiry has expired
If your score has increased since your initial financing, you may be eligible for a much lower car loan APR. And that can add up to hundreds (if not thousands) of dollars in savings.
Note: It is a good idea to get a copy of your credit report. You can do this once per year for free from each of the three credit reporting agencies: Experian, Transunion, and Equifax. Check your report for any errors and inconsistencies and contact the agency if you find anything that is inaccurate. This can ensure your credit score is as accurate–and as high–as possible.
When the Market Rates Have Decreased
The car loan APR you are offered will be determined in part by the market rates. If the economy is not performing well, or is not expected to perform well, the market rate will lower to encourage spending. That is when you will find the lowest car loan APRs. If the rates are lower now than they were when you first financed your car, you may be eligible for a lower car loan APR.
When You Need Some Breathing Room
There are a lot of reasons to refinance your car loan, but one of the most common reasons is to lower your monthly car payments. If you are in a tight spot every month when it comes to paying your bills–maybe your hours got cut, or your other bills have increased unexpectedly–refinancing can help you reduce your monthly car payments.
Car loan refinance can lower your monthly payments in a few ways. First off, if you qualify for a lower car loan APR your monthly payments will automatically be lower. But even if you do not find a drastically lower APR, refinancing will allow you to change your repayment period. By stretching out your car loan repayments over a longer time, you will reduce your monthly payments drastically. You will end up paying back more money over time as you will be paying more interest back overall, but this decrease in monthly payments can help you if you are in a tight spot with your monthly payments.
And finding a loan with 90 days without payments can give you a break to get your finances back on track.
When You Have More Than Two Years Left On Your Original Loan
Car loans are front loaded amortized loans, which means in the beginning of the loan your payments go more towards the interest, and towards the end of the loan your payments go more towards the principal.
Car loan refinancing helps you to save money on interest. As your loan is nearing the end of your term, you are paying primarily towards the principal, so it is less beneficial to refinance. By making sure that you have more than two years left on your loan you will benefit much more from car loan refinance.
How do I refinance my car?
Car loan refinance is super easy, especially when you use a company that specializes in car loan refinance. Just follow these three easy steps below and start saving money.
Do Your Research and Prepare
There are a few steps you should take to ensure that you will get the best refinance possible. It’s good to research different lenders to see what types of loans are out there. While you won’t have any specifics until you apply, you can get a rough idea of what different lenders are offering. Talk to family and friends to get recommendations for reputable lenders and try to pick three to five lenders that you would like to pursue.
Check to see which lenders offer 90 days without payments. There are quite a few of them out there (or you can use Auto Approve and they can do the research for you and save you the hassle!)
You will also want to prepare your finances. Check your credit report and credit score to make sure there are no inaccuracies. Collect all of the documents you will need for applications as well. You will most likely need the following:
- A Photo ID
- Your vehicle’s information, including the bill of sale, VIN number, make, model, and year of your car
- Proof of insurance
- Proof of income and financial history, this will vary from lender to lender but may include pay stubs, banking information, and your credit report
- Proof of residence, such as a mortgage statement, lease agreement, or utility bill (this cannot be a PO box)
Apply and Compare
Once you have done your research and gathered your documents, you can begin applying. Be sure to apply all at once–all inquiries in a fourteen day period will count as one hard inquiry on your credit report. When the offers come in, be sure to compare the following:
- The car loan APR
- The repayment period options
- The prepayment penalties
- Other fees
Also take into consideration whether or not the lender offers a 90 day no payment option. If you use a loan refinance company like Auto Approve they can handle the application process for you. They have relationships with lenders across the country, so you can be sure you are getting the best rates and offers possible.
Sign and Save
When you decide which loan is right for you, just simply sign on the dotted line and start saving! It’s just that easy! And if you use Auto Approve, they even handle the DMV paperwork so you don’t have to deal with it. If your loan doesn’t require payments for 90 days you can immediately enjoy the breathing room.
And that’s how car loan refinancing can get you up to 90 days with no car payments.
If you could use some more breathing room in your monthly budget, car loan refinancing is a great way to do so. And with Auto Approve, it couldn’t be easier.
So don’t wait, get your free quote today!