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Here’s what you need to know. Credit scores are crucial in determining eligibility for various loans, including car loans. Your credit score is determined by factors like payment history, types of credit, length of credit history, credit utilization, and recent inquiries on your creditYour credit score is a key factor lenders use to determine whether or not to give you a loan, and if so, at what rateThis is true both when getting a new loan and refinancing an existing loanIf your credit score is low, there are things you can do to raise it or secure a loan anywayRead on for a more detailed look at credit scores and their effect on your ability to get an auto loan or auto loan refinance.Credit Scores and Car Loans: Your GuideUnderstanding how credit scores impact car loans can help potential buyers make informed decisions. In this article, you’ll learn about the intricacies of credit scores and their influence on car loans and refinancing, as well as get tips for improving your credit score and navigating car loans if your credit score is low.Understanding Credit ScoresFirst, let’s look at the following frequently asked questions about credit scores:What is a credit score?How is a credit score calculated?Why do credit scores matter for car loans?How does your credit score affect your interest rate?What Is A Credit Score?A credit score is a numerical representation of an individual's creditworthiness. Here are the ranges as defined by FICO.RatingCredit Score RangePoor<580Fair580-669Good670-739Very Good740-799Exceptional800+It is derived from a person's credit history and serves as a tool for lenders to assess the likelihood of repayment. A higher credit score typically indicates a lower credit risk, making it easier to secure favorable loan terms.A good credit score is crucial for various financial transactions, such as applying for a mortgage, car loan, or credit card. Lenders use this score to determine the interest rate you will be charged and the credit limit you will receive. Therefore, maintaining a healthy credit score is essential for accessing affordable credit and favorable terms.How Is A Credit Score Calculated?Credit scores are calculated using various factors, including: Payment historyCredit utilizationLength of credit historyTypes of creditNew credit inquiriesThese factors are analyzed using sophisticated algorithms to generate a three-digit number that expresses your perceived credit rating and worthiness.Payment history plays a significant role in determining your credit score. It reflects whether you have paid your bills on time, missed any payments, or defaulted on loans. Consistently making on-time payments can positively impact your credit score and demonstrate your creditworthiness to potential lenders. Credit utilization, which is the amount of credit you use compared to your total available credit, also influences your score. Keeping your credit utilization low can help boost your credit score and show responsible financial behavior.How Does Your Credit Score Affect Your Interest Rate?Lenders use credit scores to measure a borrower's ability to repay the loan on time. Higher credit scores often result in lower interest rates, potentially saving borrowers thousands of dollars throughout the loan, because the lender believes the borrower is more likely to make all their payments and in a timely fashion. Lenders offer higher rates when they feel they’re taking on more risk with the borrower.And that’s not all.A good credit score not only affects the interest rate you’re offered, but also the loan terms available to you. Borrowers with high credit scores may have access to better loan terms, such as longer repayment periods or lower down payment requirements. This can make a significant difference in the loan's overall affordability and the borrower's monthly payments.Why Do Credit Scores Matter For Car Loans?Credit scores impact not only the interest rates but also the approval process itself. Lenders may be more willing to approve loans for borrowers with high credit scores due to their demonstrated history of responsible financial behavior. On the other hand, borrowers with lower credit scores may face more stringent approval requirements or may need to provide additional documentation to support their loan application.Borrowers with excellent credit scores can typically secure the most favorable interest rates, while those with lower scores may face higher rates or be deemed higher risk. This is because lenders factor in the potential risk of default when determining interest rates.Ways to Improve Your Credit Score For Better Car Loan OptionsTaking proactive steps to boost your credit score can increase your chances of getting more favorable loan offers.In this section, we’ll look at:Strategies to boost your credit scoreThe expected time frame for credit score improvementStrategies To Boost Your Credit ScoreKey ways to improve your credit score include: making timely payments, keeping credit utilization low, avoiding unnecessary credit inquiries, and maintaining a healthy mix of credit types. Gradually implementing these strategies can help elevate your credit score, opening up more favorable loan options.To start, consider these actions:Ensure you pay your bills on time. Payment history is a significant factor in calculating your credit score.Keep your credit utilization low by not maxing out your credit cards or by paying down credit card debt. This can also help improve your score.Time Frame For Credit Score ImprovementImproving your credit score takes time and patience. Positive changes to your credit habits can take a few months or longer to be reflected in your score, depending on your individual circumstances. Consistency and responsible financial behavior are key to significantly improving your credit score.Navigating Car Loans With A Low Credit ScoreA low credit score does not always mean obtaining a car loan is impossible. Here’s the short version:There are options available for car buyers with less-than-perfect credit. Some lenders specialize in providing loans to individuals with lower credit scores, although these loans may come with higher interest rates and stricter terms.Exploring alternatives such as secured car loans or co-signing may help secure a car loan despite a low credit score.Options For Car Buyers With Low Credit ScoresSecured car loans are a viable option for individuals with low credit scores. These loans require collateral, such as the vehicle itself, which reduces the lender's risk. By offering collateral, borrowers may have a better chance of being approved for a car loan, even with a low credit score. However, borrowers must understand that defaulting on a secured car loan can result in collateral loss, typically meaning the vehicle would be taken away from them.Borrowers with less-than-ideal credit scores can also look into getting a loan with a co-signer or co-borrower. This is common for young people without much credit history and for those working their way back from a low credit score. If you have a family member or trusted person with good credit willing to share responsibility for the loan with you, you may be able to get approved or get a better rate based on their good credit.Risks And Considerations For High-Interest Car LoansHigher interest rates can result in higher monthly payments and increased overall loan costs. Before committing to such loans, borrowers should carefully evaluate their financial situation and consider the long-term implications of the loan terms. High-interest car loans can lead to financial strain for borrowers, potentially impacting their ability to meet other financial obligations. It's essential for individuals with low credit scores to assess whether the loans available to them are manageable within their budget and to explore other options, such as improving their credit score before applying for a car loan. By taking proactive steps to enhance their creditworthiness, borrowers may qualify for more favorable loan terms in the future.Credit Scores And Car Loan RefinancingRefinancing a car loan involves obtaining a new loan with better terms to replace an existing one. It can be a valuable option for borrowers looking to lower their monthly payments or secure a lower interest rate. Refinancing is essentially the same as applying for a new auto loan, when it comes to credit score considerations, with a few added dimensions to keep in mind—in particular, how your credit score or financial picture has changed since you got your initial loan.Read on to understand:When to refinanceHow getting a new loan or refinancing a loan could affect your credit scoreWhen To Consider Refinancing Your Car LoanYou may want to refinance if:Your credit score has gone upYour debt-to-income ratio has gone downMarket rates have come downYou’re having trouble meeting your monthly payments and need new loan termsYou got a bad deal on dealership financingLet’s take a closer look.Your FinancesHaving an improved credit score often opens the door to refinancing opportunities, resulting in substantial savings over the life of the loan. The same is true for an improved debt-to-income ratio.Refinancing can also provide an opportunity to adjust the loan term, potentially extending it to lower your monthly payments or shortening it to pay off the loan sooner.The MarketIf market interest rates have dropped significantly since you initially took out your car loan, refinancing could be a strategic move to capitalize on the lower rates and reduce your overall interest expenses. Your Initial LoanLastly, if you got dealership financing, it’s likely you got a higher rate than you qualified for due to dealership rate markups, in which case you may want to consider refinancing in order to secure the rate you qualified for in the first place, even if little else has changed.How Car Loans and Refinancing Can Affect Your Credit ScoreRefinancing or getting a new car loan may temporarily impact your credit score. When you apply for financing or refinancing, you’ll get a hard inquiry on your credit report. However, the effects of this inquiry and new line of credit are temporary. If you make your payments consistently and responsibly, your new line of credit or refinance can raise your credit score in the long term.Particularly with refinancing, it's essential to note that while a hard inquiry may initially cause a slight dip in your credit score, the long-term benefits of refinancing, such as lower interest rates and improved payment terms, can outweigh this temporary effect. By staying vigilant about your credit utilization and payment history, you can mitigate any potential negative impacts on your credit score and position yourself for financial success.Now You Know All About Credit Scores & Auto LoansHere are a few key takeaways:By understanding how credit scores and car loans intersect, potential car buyers and those looking into auto loan refinancing can make informed decisions about their financing options. Being proactive and responsible with your finances can lead to a better credit score and greater financial freedom in the future.Improving your credit score, exploring alternative loan options, and considering refinancing can all contribute to securing a car loan that aligns with your financial situation and goals. If you’re interested in refinancing an auto loan, Auto Approve is here to help. When you refinance with Auto Approve, you get access to our network of 50+ trusted lenders, and an auto refinance expert to review your options with you and take care of the paperwork for you to make refinancing as quick and easy as possible so you can skip straight to saving money.GET A QUOTE IN 60 SECONDS

Here’s the quick version. When you’re shopping for a new auto loan or auto refinance, you should make sure to pay attention to the following things if you want to make sure you’re getting the best possible rate. Taxes Origination fees Registration fees Your overall APR Your interest rate Any dealer’s reserve Pre-payment fees Your loan term Some of these fees will be stated outright, while others you might need to infer. This is part of why it’s always good to get a pre-approval before going into a dealership—so you have a good sense of the interest rate and annual percentage rate (APR) you qualify for and can catch any added markups or fees.Read on to take an in-depth look at these fees, mark-ups, and other fine print items that can affect how much you pay on your auto loan.Auto Loan Fees: The Complete GuideDoesn’t it seem like the price tag these days is never the real price tag? Everything has added fees and hidden costs, so it is almost a guarantee that everything will cost more than you expect. And auto loans are no exception, whether you're buying a new car or refinancing your vehicle. There are always extra fees that rear their head and end up costing you an arm and a leg. So in this guide, you’ll get a much needed heads-up as to what to look for when you are choosing an auto loan.We’ll answer:What fees are charged on an auto loan?What should I look for when choosing a car loan?Should I refinance my existing auto loan?What Fees Are Charged On An Auto Loan?TaxesOrigination FeesRegistration FeesAbout Auto LoansFirst let’s discuss how auto loans are calculated, and then we can get into the added fees that come into play.You’ve picked out your car and you are so excited—it’s exactly what you want, down to the color and trim level. Once you have picked out all your add-ons, you have the total cost of the car. That is what your loan will be based on. The total amount of the car minus any down payment is the starting point for your loan. And then (drumroll please), enter the fees.Fees and taxes are added onto your principal (the tax is calculated based on the total cost of the car), which combined with your car loan APR, will determine your monthly payments. Here are some of the fees you can expect to pay for your car loan. These fees may also apply when you are refinancing your car, so if you choose to refinance, keep that in mind.TaxesYes, you have to pay sales tax on your new car. And that can add up to a lot of money. On a $30,000 car in a state with 6% sales taxes, that’s an extra $1800 for which you are responsible. This added cost gets added into your principal when you finance. Obviously taxes are non negotiable, so they are an added cost you will have to pay. You will not need to repay taxes when you refinance your car loan.Origination FeesOrigination fees are essentially the commission on a loan. They are also known as acquisition fees. They essentially pay for all of the paperwork that is required for financing. They are usually calculated as a percentage of the original loan, between 1% and 2% of the principal amount. On a $30,000 car with a 2% origination fee, it would be an extra $600 tacked onto your financing. While you might not be successful, it is definitely worth trying to negotiate on the origination fees. They are one area where the lender has some discretion, and it never hurts to ask. It might end up saving you a couple hundred dollars.Registration FeesAnd then there are the registration fees. You must pay a registration fee, title fee, and sometimes a plate transfer fee. These fees will depend largely on where you live, but you can expect them to run you somewhere around $150. These are non-negotiable fees.What Should I Look For When Choosing A Car Loan?Interest Rate and APRPayment TermsPrepayment PenaltiesCustomer SatisfactionIn addition to the fees that are charged, what else should you look for when choosing an auto loan? There are a number of factors that should come into play when deciding on car loan financing. Here are the top things to consider.Interest Rate and APRWhen choosing a car loan, the car loan APR is perhaps the most important thing to consider. Securing a lower APR is what will save you money. The interest rate that you are offered will be based on a number of factors, such as:Your credit scoreYour payment historyYour incomeYour debt-utilization ratioPrevailing interest ratesYour APR is your combined interest rate + any fees. For refinancing:If your credit score has increased since your initial financing, you may be eligible for a lower APR. If your income has increased, your debt utilization ratio has decreased, or market rates have decreased, you may also find that you are eligible for a lower car loan APR.If your credit score has not improved, aim to increase your score before refinancing. Your credit score is the single most important factor when lenders are preparing their financing offers. Look to make consistent, on time payments and request higher credit limits. Reducing your credit utilization ratio will also help immensely. Committing to increasing your credit score will help you secure a lower rate and save you money in the long run. Loan Payment TermsWhen deciding on a car loan, you want to consider the payment periods as well. In general, lower APRs are tied to shorter repayment periods, while higher APRs are tied to longer repayment periods. The shorter payment period will mean that your monthly payments will be higher (because you’re paying more of the loan in each payment), while a longer payment period will mean that your monthly payments will be lower. You will have to figure out what works best for you—sometimes a longer loan term and higher APR is the right choice to keep your monthly expenses low. But note that sometimes, when you get dealership financing, you’re offered something that looks like a better deal because it includes a longer loan term, meaning you have a lower monthly payment, but because of the APR, will cost you a lot more in the long run.Prepayment PenaltiesMany car loans have prepayment penalties built into them. This is to dissuade borrowers from paying off early (after all, the earlier you pay the loan off, the less interest you will end up paying and the less money they will make). If you are thinking that refinancing might be an option in the future, this may factor into your decision. These prepayment penalties can vary widely and can be quite expensive.The Customer Satisfaction RatingsYou should always pay attention to what other customers are saying. Are the lenders reliable and trustworthy? Are they responsive when there are issues? Check out websites like TrustPilot, Better Business Bureau, and Lending Tree to see what some of the most common complaints are. Top complaints for auto loan financers tend to include the following:Communication issues in regards to forbearance (when you pause your payments temporarily)Repayment options for forbearanceDelays from lender with regard to loan modificationOvercollection of funds for taxes and insuranceConfusion with account noticesPutting overpayments into an unallocated fund rather than applying them to the loan’s principalCommunication issues and a lack of transparency are usually at the top of the list when it comes to auto loan lenders. Be sure to consider this when making your decision.Should I Refinance My Existing Auto Loan?If you already have a car loan, you may be wondering “should I refinance my car loan?” And the answer is: probably! Here’s how you can decide if a car loan refinance is right for you.Car loan refinance is worthwhile if any of the following apply to you:You got talked into dealer financing with your original loan (which have notoriously high car loan APRs)Your credit score has improved since your initial financingThe market rates have dropped since you initially applied You need some extra breathing room in your monthly budgetYou want to add or remove a co-borrower to your loanIf any of those apply to you, car loan refinance may be a great option to save money and make your life a little easier. On the other hand, if any of the following apply to you, it might not be the best time to refinance your car loan.If your existing loan has heavy prepayment penaltiesIf you need a high credit score for another applicationIf your existing loan is less than six months oldIf your existing loan has less than a year leftIf your credit score has decreasedAnd That’s What You Need To Know About Auto Loan Fees And How You Can Decide Which Car Loan Offer Is Right For You.Choosing an auto loan is a big decision, but it’s worth taking your time to read the fine print, because choosing the right loan for you can save you a lot of money and stress in the long run. And, if you got a bad deal or your loan no longer works for you, don’t fret! Get a free, no-commitment quote from Auto Approve and our refinance experts can help you find a better deal and understand the fine print.At Auto Approve, we work with a network of over 50 trusted lenders all over the country, which means we can get you the most competitive rates out there. Our experts can not only guide you through the process of refinancing, but can help you compare offers and complete the paperwork. Auto Approve will even handle the pesky paperwork for the DMV! So, if you are thinking about car loan refinance, get your free quote now—all you have to do is answer a few questions and you’ll have a quote in minutes. GET A QUOTE IN 60 SECONDS

Why refinance an SUV? Here’s the short version. To save money. To balance your budget. To get out of a bad deal or loan that no longer works for you. Should You Refinance Your SUV? Your Guide Have you considered refinancing your SUV loan? Since most dealerships markup rates, millions of American drivers are paying more monthly than they need to be on your auto loan. Whether your monthly budget is tight, you want to change the terms of your loan, or you just want the better rate you deserve, refinancing is the best way to get a better deal on your vehicle loan.Isn’t refinancing a hassle?Nope! Refinancing is quick and simple, especially when you work with our refinance experts at Auto Approve. We’ll connect you with our network of 50+ trusted lenders, help you understand your options to find the right refinance for you, then do the paperwork for you — with no markups to your rate.Read on to read more about the how and why of refinancing.Here Are Our Top Three Reasons To Refinance Your SUV.Reason #1: Refinancing Can Save You A Lot Of MoneyDrivers who refinance with Auto Approve save an average of $135-$500 per month.For the vast majority of drivers, saving money is the ultimate goal of refinancing. By finding a lower car loan APR, you can drastically reduce the interest that you will have to pay over the life of the loan. Car loans are front-loaded amortized loans. This means that, in the beginning of your repayment, you are primarily paying back the interest, and as time goes on you gradually pay more towards the principal and less towards the interest. So the earlier you refinance your SUV loan, the more you save overall.Finding a lower car loan APR depends on two key factors: market rates and your finances.Market RatesThe interest rate that you are offered will depend in part on the prevailing market rates. If market rates are lower now than they were when you originally financed your SUV, you will most likely be able to secure a lower car loan APR. Your FinancesIf your credit score has increased since your initial financing, you will most likely be able to secure a lower car loan APR if you refinance. You may also be able to get a better rate if your credit score is the same but other factors have changed, like your income or debt-to-income ratio. However, your credit score is the most important factor lenders look at when deciding what interest rate is appropriate. Your credit score is based on:Payment history (35%)Amounts owed (30%)Length of credit history (15%)Credit mix (10%)New credit (10%)Your payment history and amounts owed make up the largest portion of your credit score. Making full, consistent, on-time payments and reducing the amount of overall debt you owe will make the biggest difference on your credit score. If you have been paying down your debts and consistently paying your bills, there is a good chance that your credit score has increased and you can secure a lower car loan APR.Reason #2: Refinancing Can Help With Your Monthly BudgetBy refinancing your SUV, you can loosen up your monthly budget significantly. Your monthly vehicle payment can be reduced by lowering your auto loan APR, lengthening your repayment period, or both.Reducing your car loan APR will automatically reduce the amount of your monthly car payment. Let’s say you buy a $25,000 car with a $5,000 down payment. You finance the remaining $20,000 with a 7% loan over 48 months. Your monthly payments will be around $480. But let’s say you now refinance your loan to a 3.5% APR. Now your monthly payments are down to around $445. That little extra might make all the difference in your monthly budget. Over the course of four years, that’s a savings of over $1,000.Lengthening your repayment period will also change your monthly payments significantly. Let’s look at that same $20,000 loan at 7% over 48 months. Changing your repayment period to 60 months will change your monthly payments from around $480 to around $400. That is a huge monthly savings (although keep in mind that you will be paying more interest over the life of the loan due to the extended repayment).If a little extra breathing room would help you with your monthly budget, refinancing your SUV is a great way to save some extra money.Reason #3: Refinancing Can Get You Out Of A Bad DealIt’s all too common for people to get roped into bad financing deals due to dealership markups. A lot of the time it’s all down to a smooth talking salesman and a moment of weakness. If you were a little underprepared when you went to look at a new SUV, you may have been blindsided and agreed to something that was less than ideal. Here are a few reasons that a loan might be considered unfavorable:The APR Is Too HighCar dealerships have notoriously high APRs. This is because they merely act as middlemen in your loan transaction with the lender. They simply markup the rates and fees that the lender offers. You should always avoid financing through dealerships–it’s much better to get a loan through Auto Approve. Unlike dealerships, Auto Approve never marks up their prices–ever. They compare different lenders and offers and pass the savings right on to you. The Lender Has Bad Customer ServiceBad customer service can be a serious issue when it comes to financing. Not only is it downright frustrating to not be able to communicate when you need it, but it can cost you money. According to Consumer Financial Protection Bureau, these are the major complaints with lenders:Communication issues about forbearance (a temporary pause in payments)Repayment options regarding forbearanceDelays from lender with regard to loan modificationOvercollection of funds for taxes and insuranceConfusion with account noticesPutting overpayments into an unallocated fund rather than applying them to the loan’s principalThese issues with lenders can add up and cost you money in the long run. So if you are in a bad relationship, you want to get out of it immediately. Refinancing your loan is a great way to do that.The Repayment Period Is Too LongWhile a longer repayment period will reduce your monthly loan payments, it will cost you more in the long run. If you are able to refinance your loan for a shorter period, you can save a lot of money.You Had To Use A CosignerIf your credit was not great, you may have needed a cosigner to get approved for your current loan. The only way to remove a cosigner is to refinance your loan. So if you are looking to take sole ownership of your loan, refinancing is the way to go.Those Are The Top Three Reasons To Refinance Your SUVThere are a lot of great reasons to refinance your SUV. From saving money to saving yourself from frustration, refinance can make your financial life much easier. If refinance sounds like a good option for you, getting started is easy: just get in touch with Auto Approve today! Our experts can answer any questions and help you start saving money now. Don’t wait to start saving – get your free quote.

In a Hurry? Here’s the Quick version. If you’re refinancing your vehicle loan, you should make sure to ask about the fine print. Be sure to ask your new lender (or possible lenders) the following questions before you sign:What is my new interest rate?What will my new APR be? What fees are included in that?What are my loan term options?What will my new monthly payment be?When will my payments start on the new loan?What paperwork do I need to file and what paperwork will you be handling?Are there any prepayment penalties on this loan?And make sure you read the fine print on your current loan. You want to make sure your savings outweigh any fees or prepayment penalties that might come up when you pay off your existing loan early.Read on to learn more about what you should watch out for when refinancing, why each question matters, and the best way to refinance.What to Ask When Refinancing A Car: Your Guide to the Fine PrintIn this guide you’ll find:A breakdown of the essential questions to ask when refinancing a carWhat to check for on your old loan before refinancing The best way to refinanceEssential Questions To Ask When Refinancing A CarRefinancing your auto loan is a great way to save money, if you do it right. Here are the most important things to ask about or check in your new loan agreement before signing.What is my new interest rate?Ideally, when you refinance, you will secure a lower interest rate than you had on your old loan.The best way to secure a better interest rate is to time your refinance based on factors like market rates and your financial picture (especially your credit score). If you’re worried you won’t qualify for a better interest rate, consider taking steps to improve your credit or adding a cosigner or co-borrower with good credit.What will my new APR be? What fees are included in that?Your annual percentage rate, or APR, is the most important thing to know and understand when getting any new loan or financing. Your interest rate matters, but it doesn’t give you the whole picture. The APR determines what you actually pay — it’s your interest rate plus any fees.If your APR is much higher than your interest rate, you’ll want to ask for a breakdown of what you’ll be paying for. Compare your new APR to your old one to get a sense of how much you’ll be saving.If you’re on the fence about refinancing and got your initial loan through a dealership, it’s definitely worth getting a quote, because dealerships often add markups to their loans that make the APR much higher than the interest rate you actually qualified for.What are my loan term options?When you refinance, you have the option to shorten or extend your loan term. Shortening it might mean a higher monthly payment but much more money saved over time. Lengthening it may cost you more in interest, but can help lower your monthly payment if your budget is tight.Make sure you understand your loan term and how it’ll affect how much you pay in interest and fees over time.What will my new monthly payment be?Review the final number on your new monthly payment before you refinance. This is, of course, the thing most people refinancing their vehicle will be most concerned about. It can be easy to get lost in interest rates and APRs, but you want to know, going in, the actual numbers before you lock yourself into a new payment.It is common to get an initial quote when you’re looking to refinance, but depending on the specifics of your finances, that quote may not match your final new monthly payment.When will my payments start on the new loan?When you refinance, your new loan payments may not start right away—in fact, some lenders don’t ask for your first payment until three months after the paperwork is signed.If money’s tight, refinancing with a lender that offers this option can be a great way to get some breathing room. Just make sure that your old loan is paid off before you stop making payments!What paperwork do I need to file and what paperwork will you be handling?There’s a lot of paperwork whenever you’re getting a new loan. When you refinance your vehicle, you’ll need to file paperwork with the DMV, for example. Some lenders will handle some key submissions for you, while others will leave it to you. When you refinance with Auto Approve, our refinance experts will handle all the paperwork for you, including the DMV.Are there any prepayment penalties on this loan?Prepayment penalties can take a big bit out of your potential savings.While most people don’t need to refinance more than once, it’s a good idea to make sure you know what would happen if for some reason you chose to refinance again. We make refinancing easy.When you work with Auto Approve, you get a dedicated refinance expert to guide you through the process and access to our network of over 50 trusted lenders—and we’ll never mark up your rate. Customers save an average of $135-$500/month.Get a free quote to see how much you could save.What To Check For On Your Old Loan Before Refinancing Before you lock in a refinance, make sure you know:Your old APR and interest rateYour loan term and how much time is left on your loanWhat you’ve been paying monthlyIf there are any fees or prepayment penalties you’ll have to pay when refinancingThe Best Way To RefinanceIf you’d rather have your questions answered before you need to worry about asking them, refinance with Auto Approve. When you apply through Auto Approve’s trusted lender network, you’ll also get help from our refinance experts, who will talk you through your options and the fine print to help you find the right deal for your unique financial picture, and handle the paperwork for you.Why refinance a vehicle at all?Because it’s a smart financial move: you can save hundreds of dollars a month.Refinancing can lower your monthly payment through savings, extending your loan term, or both, and give you a few months without payments when your budget is stretched too thin.To make a change. That is, it's the only way to add or remove a co-borrower or to change your loan term.Be Prepared When It’s Time to Refinance Your Auto LoanThese are the key things to ask about when refinancing and why they matter — and now you know how to skip the questions and go straight to your best available refinance.Refinance with Auto Approve to get all the answers you need without the legwork.Get your free quote now.

Here’s the short version. A soft inquiry does not affect your credit score. A hard inquiry will lower your score by several points, but the hit is temporary. Too many hard inquiries in a row can, however, hurt your score more, so it’s best to group multiple applications in a two week period and space out major purchases that require a credit check. Read on to learn more about the difference between hard and soft credit inquiries and how they can affect your FICO® credit score.Your Guide to Hard and Soft Credit InquiriesIf you’ve applied for credit in the past, you've probably heard the terms "hard inquiry" or "hard pull." But what exactly is a hard inquiry, and how does it affect your credit score?In this guide, we’ll share answers to the following frequently asked questions about credit scores and credit inquiries:What is a credit score?Is a FICO score the same as a credit score?What’s the difference between a hard and soft credit inquiry?How do hard inquiries affect your credit score?How many hard inquiries is too many?Does applying to refinance trigger a hard inquiry?How do you dispute a hard credit inquiry?How long do hard credit inquiries stay on your credit report?How do you minimize the effect of hard inquiries on your credit score?Let’s dive into it.What Is A Credit Score?A credit score is a three digit number that tells lenders how likely a candidate is to repay borrowed money. The number ranges between 350 and 850 and is calculated based on the following factors:Payment History. This accounts for 35% of your credit score. This shows lenders if you pay your credit accounts on time or not. It will also show missed payments and bankruptcy details.Accounts Owed. This accounts for 30% of your credit score. This refers to the amount of money you owe. This number is considered in relation 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.Length of Credit History. This accounts for 15% of your credit score. The longer you have had credit, the higher your score will be.Credit Mix. This accounts for 10% of your credit score. You will need a good mix of retail accounts such as credit cards, loans, and mortgages for a good score.New Credit. This accounts to 10% of your credit score. If you open a bunch of new accounts, you will be flagged for a lower score.Is A FICO® Score The Same As A Credit Score?Yes. FICO is essentially a brand of credit score. FICO stands for the Fair Isaac Corporation. It’s a software analytics company that produces the most widely used software for calculating credit scores. Almost 90% of credit decisions are made using FICO scores. So ultimately, yes, your FICO score is your credit score. What’s The Difference Between A Soft Inquiry And A Hard Inquiry?A soft inquiry, also called a soft pull, is a preliminary credit check. These credit checks are unrelated to direct lending decisions. These pulls can be done with or without a consumer’s consent. Some examples of soft inquiries include:A consumer checking their own credit score.A credit card company looking to pre-approve applicants.A background check performed by a potential employer.An insurance company looking to pre-approve quotes.Soft inquiries do not affect credit scores at all, they only provide preliminary information for those inquiring. That means, for example, if you’re thinking about refinancing your vehicle, you can get a free, no-commitment quote without a hard credit inquiry.A hard inquiry, also called a hard pull, is a formal credit check. Hard inquiries are done when consumers are actively seeking new lines of credit. These credit checks usually need to be authorized by the consumer. Lenders will make hard inquiries when you are:Applying for a mortgage.Applying for a car loan.Applying for a new credit card.Applying for a new apartment.Applying for a credit limit increase.Some utility companies will also perform hard or soft inquiries. If you are unsure what a pull will be classified as, be sure to ask these companies when you reach out to open these accounts.How Do Hard Inquiries Affect Credit Scores?The more hard inquiries you have in a short amount of time, the more of an effect the hard inquiries will have on your credit score. One hard pull may not affect your score at all, and if it does it will likely not drop your score by more than ten points. The risk comes when you open multiple new accounts. This is because you are then affecting the “New Credit” and “Length of Credit” categories on your credit score, which together account for 25% of your score. Does Applying To Refinance Trigger A Hard Inquiry?Applying to refinance your vehicle or mortgage will trigger a hard inquiry. Since you are applying for a new line of credit that will buy out your old line of credit, lenders need to see a full and detailed credit report. Condensing your refinancing shopping time to a window of two weeks will help minimize damage, this way multiple hard inquiries for auto loans will be counted as one hard inquiry. How Many Hard Credit Inquiries Is Too Many?This depends largely on your overall credit health and history. One or two hard inquiries will not make a big difference if you have a good credit score, but more than that and you risk dropping your score by 20 points or more. That said, again, multiple inquiries in a two week period will be counted as one singular inquiry.How Do You Dispute A Hard Credit Inquiry?If you see something that you didn’t do or authorize on your credit report, you can dispute items on your credit report with the major credit agencies. Experts recommend checking your credit score three times per year. There are three major credit agencies, Equifax, Experian, and TransUnion, and each of these allow you to pull your report for free once per year. Take advantage of this and strategically check your report throughout the year. If you notice there are hard inquiries that you did not authorize, contact the credit agency directly. This could be a sign of identity theft, and if that’s the case you want to take action early to minimize damage. Even if it’s not identity theft, you want to clear up any errors to make sure your credit report is accurate. Before you file a dispute however, do your research to make sure it’s not valid. Sometimes credit checks come from lenders that we might not recognize.How Long Do Hard Credit Inquiries Stay On Your Credit Report?Hard inquiries are calculated into your credit score for one year, but the inquiries remain on your report for two years. In other words, after one year they no longer affect your score.How Do You Minimize The Effect Of Hard Inquiries On Your Credit Score?The most important thing you can do when shopping around for a loan is to condense your search time. Credit bureaus give a two week period for inquiries to be made. If you apply for multiple loans in this period, the credit agency will consider them as one hard inquiry. This is the most important thing you can do to minimize damage from multiple hard inquiries. If you choose to refinance your vehicle with Auto Approve, we’ll make sure your applications are all submitted within the window, so you won’t have to worry.In general, experts caution you to be aware of hard inquiries, but they stress that this part of your credit report is the least impactful. Missed payments and high credit balances are much more detrimental than new credit inquiries.And That’s Everything You Need To Know About Hard Inquiries, Soft Inquiries, And Their Effect On Your FICO® Credit Score.Now you understand how credit inquiries can affect your credit score. And if you're thinking about refinancing your vehicle to a lower interest rate to save money, Auto Approve can help. Start with a soft inquiry and get your quote in just 60 seconds.

Here’s the quick version. A cosigner is someone who guarantees a loan. The primary borrower is responsible for their monthly loan payments and has their name on the loan and asset, but should that primary borrower default, the cosigner would be on the hook for payments.A co-borrower is someone with equal status on a loan as the primary borrower. Both borrowers hold equal responsibility to make payments each month and have equal stake in the asset and responsibility for the loan.Read on for a more in depth look at the differences between these two terms commonly used in lending, plus why you might want a cosigner or co-borrower and how to add or remove one from your auto loan.The Difference Between Cosigning And Co-Borrowing: Your GuideCosigner and co-borrower. These words are sometimes mistakenly used interchangeably, but there’s a big difference between being (or having) a cosigner vs. co-borrower, so it’s important to distinguish between the two.In this guide, you’ll uncover the answers to the following frequently asked questions about cosigners and co-borrowers:What is a cosigner?What is a co-borrower?Is it good to have a cosigner?How can I remove a cosigner?How can I add a cosigner or co-borrower to my loan?Let’s take a closer look.What Is A Cosigner?A cosigner is someone who agrees to be legally responsible for a loan if the original borrower defaults on the payments. Cosigners essentially give lenders a guarantee that someone else will be responsible for payments should the loan agreement not work out as intended.Cosigners can be found on apartment rental agreements, personal loans, mortgages—really any type of loan or rental agreement. If a borrower is young and has yet to establish credit, it is common for a parent or loved one to step in and cosign until the borrower has built up their credit. If a borrower is just getting out of a bad situation, such as a bankruptcy or credit card debt, a cosigner may be able to help them get back on their feet. Many car lenders have the following requirements for a first time car loan:You must have a monthly income of at least $1,600.You must make a down payment of at least 20%.You must have a credit score of at least 680.You must have established credit and not have a credit utilization ratio that is higher than 50%.Lenders may require proof of stable work history in addition to this. If you are a first-time car buyer, these may seem like difficult requirements. Lenders will therefore allow you to get a loan if you provide a cosigner.There are a few requirements to become a cosigner on an auto loan:They must be willing to cosign and accept the responsibility of repayment if necessary.They must have good credit, generally above 700.They must prove they have a stable income that can pay for the loan if it defaults.They must prove their residence.They must prove their employment.Lenders will consider all of this information in conjunction with the original borrower’s application materials when determining whether or not to approve the loan. Becoming a cosigner is a huge responsibility. You should only cosign a loan for someone you love and trust. It is all too common for financial relationships to put a strain on personal relationships, so it’s very important to communicate with your loved one if you decide to cosign with them.What Is A Co-Borrower?A co-borrower, on the other hand, is someone who is applying for the same loan with you. You are agreeing to equal share in responsibility of the loan and of the asset. Your co-borrower’s name will appear next to yours on the loan and on the title of the car. Your finances will be looked at with equal weight, and you’ll both need to submit the requisite paperwork. A co-borrower is a good idea if you want to own your car with someone, such as your husband or wife. They will have equal ownership, which may be perfect for you. Is It Good To Have A Cosigner?In general, cosigning a loan is a very big deal and it is a decision that should not be taken lightly. But if you are having trouble getting approved for a car loan, asking a loved one might be your only option. Having a cosigner will help you in the following ways:You will be offered a better interest rateYou will have some time to build creditYou will have someone to help guide you and give you adviceBut being a cosigner for someone else doesn’t really have a lot of benefits for the other person, and asking someone to cosign a loan is a big deal. They are on the hook financially for your loan.Insurers in some instances will hold the cosigner responsible for claims.It can be a strain on personal relationships.Before asking someone to take on this responsibility, ask yourself if you really need the loan (i.e. do you really need to buy a new car). If you are trying to build credit and are confident that you will not default, then you should take the following steps to prepare for cosigning. Prepare ahead of time before you ask them to cosign. Gather your financial information so that you can answer any questions they may have.Schedule a meeting to ask them and discuss in detail. Having a meaningful and honest conversation ahead of time is important. Make sure they are aware of what being a cosigner means.Get a plan in place for repayment. This will help assure them that you can pay back your loan.Don’t expect an answer right away. Give them time to think about what you are asking. If your cosigner agrees, it’s important that you keep them in the loop on whatever is happening with your loan. If you need help with a payment or have a problem, be transparent with them. How Can I Remove A Cosigner?If you have a cosigner on your auto loan, you may be wondering if it’s possible to remove them. Generally there are three options to get untangled from a cosigner:Ask for a cosigner releaseSell your carRefinance your loanAsk For A Cosigner Release.In certain situations a lender may allow you to simply release the cosigner from the loan. This is not typical, but it can happen in certain situations. Read your loan agreement carefully to determine if this is an option.Sell The Car.You can also simply sell the car and get a fresh start. This is a good option if the arrangement doesn’t seem to be going well and you have not been able to improve your credit enough to refinance the loan in your own name.Refinance Your Loan.The best way to remove a cosigner is to refinance your loan. When you refinance you are starting over with a new loan, so your new lender will pay off your old lender. If you have worked to improve your credit, you may be able to find a car loan with a good interest rate and repayment plan. Working with a company that specializes in refinancing can help you navigate these waters.How Can I Add A Cosigner or Co-Borrower?The easiest way to add either a cosigner or co-borrower to an existing loan is, similarly, by refinancing. You can really only add someone to a loan at the beginning of the loan, so either applying with them in the first place or applying together to refinance is the best—and often only—option.That’s Everything You Need To Know About Cosigning And Co-Borrowing.Both cosigning and co-borrowing are very serious financial relationships, although they differ on the details. Both relationships should be taken seriously and a lot of thought should be put into the decision to cosign to co-borrower before any paperwork is signed.Refinancing your loan is a great way to either add or remove a cosigner or co-borrower. If you are looking to make a change on your car loan, get in touch with Auto Approve today.Get a quote on your refinance in 60 seconds.

Can you refinance an electric vehicle? The short answer is yes. The refinance process is the same regardless of whether your vehicle is electric, gas-powered, or hybrid. However, because of the recent changes in EV credits, electric car owners may have a harder time finding a good deal when buying out a lease or refinancing right now. Read on to learn more about refinancing and unique considerations for EV owners. Financing for Electric Vehicles: The 2026 Complete GuideIn this guide, you’ll find answers to some of the most common questions about refinancing and lease buyouts for EVs.We’ll cover:The EV refinance processWhat you need to refinance an electric carHow changing EV credits could affect your financingLeased EVsThe first step if you’re considering a lease buyout or refinanceThe EV refinance processLike any other vehicle, the process to refinance an EV is fairly simple. You’ll need to:Collect all your information.Research and get quotes from multiple lenders to compare options.Choose the loan with the best terms for your financial situation and apply.Sign the paperwork and switch to the new loan.Let’s take a closer look.1. Collect all your information.Gather information about your vehicle, your current loan, and your finances. Take a moment to consider whether the timing is right for a refinance: has your credit score gone up or down since you got your initial financing? Has it been at least six months since you got your loan, and do you have at least 2 years left on the loan? How have market and EV tax credit changes affected your loan-to-value?If you got your loan from a dealership, or if your financial picture has improved, there’s a good chance you could save between $135 and $500 a month by refinancing.2. Research and get quotes from multiple lenders to compare options.Our refinance experts recommend getting quotes from at least 3-5 lenders in your refinance search to ensure you find the best deal for you. Be sure to submit all your applications within a 2 week timeframe when you get to the part of the process that requires a hard credit check — this will minimize the hit to your credit caused by a credit check.If you choose to refinance with Auto Approve, you don’t need to worry about this: you’ll get quotes from our network of 50+ trusted lenders with only one hard credit check, then an Auto Approve loan expert will help talk you through the fine print of the options available to you to help you find the deal that’s right for you.3. Choose the loan with the best terms for your financial situation and apply.Read over your options—and review your existing loan terms—to check for your new APR, loan terms, monthly payment, and any fees. You’ll especially want to check your current loan for any prepayment penalties that might outweigh your potential savings.4. Sign the paperwork and switch to the new loan.Simple as that! Once you’ve found your ideal loan option, you’ll submit any required paperwork (including to the DMV, if necessary), and once everything is locked in, your new lender will pay off your old loan and you’ll start paying the new one. Be sure that everything is settled with the old loan before you stop making payments to be safe.Again, if you refinance with Auto Approve’s lender network, we’ll handle the paperwork for you—even the DMV.What you need to refinance an electric carHere’s your refinance paperwork checklist:Driver's licenseSSNProof of addressProof of incomeCar detailsProof of insuranceVehicle registrationCurrent loan informationNeed more details? Check out our guide to the paperwork you need to refinance.How changing EV credits could affect your financingHere’s the good news: if you purchased an electric vehicle and got financing before Sept. 30, 2025, you should have already benefited from the recently canceled federal tax credit. Plus, while the EV tax credit went away, starting January 1, 2025, a credit kicked in allowing qualifying individuals to deduct as much as $10,000 per year in interest on new personal use vehicles.The bad news is, it’s likely we’ll see a slightly accelerated dip in the resale value of electric vehicles in the next few years due to the now-expired credit, and if that results in your vehicle’s value depreciating faster than what would have been estimated at the time you got your original financing, your loan-to-value on your EV could get wonky, which could affect your eligibility for a better rate.Confused? The loan-to-value on a financed car, often abbreviated as LTV, is the percentage of your car’s value that you owe on an existing loan. You can read more about what it means, why it matters, and how to improve your loan-to-value here.Leased EVsIf your EV is leased and you’re considering a lease buyout, the drop in resale value for electric vehicles may be of greater interest to you. When you come to the end of your lease, you’ll likely have the option to either return the vehicle or buy it at a price set at the time you got your lease. If that price is higher than the market value of the car, it simply isn’t a great financial choice unless you really love that specific vehicle—or know that you’ll get dinged at turn-in time for issues with the condition of the car.The first step if you’re considering a lease buyout or refinanceThe first thing you want to do is gather intel: make sure your finances are in order and check the current market value of your vehicle. Then, reach out to Auto Approve to make the process smooth and simple, with no mark-ups on your rate.And that’s everything you need to know about refinancing or leasing an EV in 2026.In short: financing or leasing an electric vehicle today isn’t all that different from a standard gas-powered vehicle, with the exception that you’ll have to pay attention to how state and federal credit changes might shift your vehicle’s market value and how many similar vehicles are up for sale.If you’re ready to get started with your refinance, the experts here at Auto Approve have helped over 180,000 drivers get a better rate. Let us help you find your best deal today.Get a free quote now.

Here’s the short answer: that depends! Auto Approve customers typically save between $135 and $500 per month.Factors that determines how much you can save by refinancing include: Your current loan rate The loan-to-value on your vehicle Whether your financial picture has changed since you got your initial financing Whether you want to add or remove a co-borrowerHow market interest rates and your vehicle’s value have shifted since you financedWhere you got your initial financing (for example, dealership financing contains markups that make you more likely to save by refinancing)Want to know more? Read on.Here’s Your Guide To How Much Money You Can Save By Refinancing Your Car LoanWhen you refinance your car loan, you essentially restart your car loan with new terms and a new car loan rate. And this can translate to a lot of money in savings. But just how much can auto refinancing save you, and how do you decide the time is right?In this guide, we’ll cover:How refinancing a car loan can help you save moneyWhat you need in order to refinanceHow to know when the time is right to refinance, if you want to save moneyHow Does Refinancing A Car Loan Save You Money?Here are three key ways you might save money through refinancing:By lowering your annual percentage rate (APR)By lowering your total interest paid by shortening your loan term orBy lowering your monthly payment by lengthening your loan termWe’ll explain.Refinancing To A Lower Car Loan APR Saves You MoneyThe most common way to save money by refinancing your car loan is to secure a lower car loan APR. You may qualify for a lower car loan APR if any of the following apply to you:The market rates have decreased since you initially financed your car.Your credit score has improved since you initially financed your car.Your debt-to-income ratio has improved since you initially financed your car.You are adding a cosigner to your car loan who has a good credit score.Your original loan contained dealership markups.Your credit score is the biggest factor that lenders consider when they are determining what car loan APR to offer you. Credit scores are designed to tell lenders how much of a credit risk you are. The higher your credit score is, the more likely you are to repay your loan (at least in the eye of the lender). So while you do not have control over the market rates, you do have control over your personal finances and your credit score. Your credit score is determined by looking at the following categories of your finances:Payment history (35%)Amounts owed (30%)Length of credit history (15%)Credit mix (10%)New credit (10%)Your payment history and accounts owed are the two most influential sections of your credit score. Therefore paying attention to these categories will help you increase your score the most. If you are interested in refinancing, it is a good idea to ensure your credit score is in top shape before applying for refinance. Commit to making full, consistent, on time payments to all of your lenders, pay off accounts with a high credit utilization ratio, request higher limits on your accounts, avoid opening new lines of credit, and review your credit report for any errors. All of these steps can help improve your score, which will lead to a better car loan APR when refinancing a car.But just how much money can you save by lowering your APR with an auto refinance? Let’s look at an example. You initially financed $25,000 with an 8% car loan APR to be repaid over 5 years. Your monthly payments are $506.91. Over the course of five years you will pay $5,414.59 in interest alone. But let’s say you improve your credit score and you are able to refinance your car loan to 5%. Now your monthly payments are $471.78 and you will pay a total of $3,306.85 over the life of your loan. That’s over $2,000 in total savings. Refinancing To A Shorter Repayment Period Saves You MoneyWhen you refinance your car loan, you can change the repayment period. You can either lengthen the repayment period or shorten it, depending on your financial needs. If you want to save money in the long run, shortening your repayment period will mean that you will pay less in total interest over the life of the loan, but your monthly payments will ultimately be higher.Let’s look at the same example from above. You initially financed $25,000 with an 8% car loan APR to be repaid over 5 years. Your monthly payments are $506.91. Over the course of five years you will pay $5,414.59 in interest alone. But if you were to refinance to a loan period of 4 years instead of five years, your monthly payments would rise to $610.32. With one less year of interest payments, you would only pay $4,295.51 in interest. That’s a savings of over $1100, even if you don’t qualify for a lower car loan APR, if you have the income to cover a higher payment. If you qualify for a lower car loan APR on top of that (and many do!), the savings add up even more.Refinancing To A Longer Repayment Period Saves You Money On Monthly PaymentsIf you are having trouble making your car payments every month, lengthening your repayment period can significantly reduce your monthly payments and give you a lot more breathing room every month. Let’s consider the above example in reverse. If you initially had a $20,000 loan with 8% APR over 48 months and refinanced to 60 months, your monthly payments would reduce by over $100. While you would end up paying more in the long run, you would give yourself a lot of breathing room every month. By making your payments more manageable, you would give yourself more money to pay other bills and pay down other debts, which can ultimately improve your credit score.What Do I Need To Refinance My Car Loan?Refinancing your car loan is easy and doesn’t require too much. The first step is to see if you qualify for a car loan refinancing. Requirements will vary from lender to lender, and eligibility typically depends on:How old your car isHow many miles your car has on itHow much money is left on your loan There may be other factors at play, but generally the older your car is and the less it is worth, the harder it will be to refinance your car loan. If your car is ten years or older or has over 100,000 miles you may not be able to refinance. Also, if you do not have a lot of time left on your loan, lenders might not feel it is worthwhile for them to refinance your loan. Auto Approve can help you determine whether or not you are eligible for refinancing. If you are eligible, you want to shop around with different lenders and compare before applying. You won’t have specific terms and rates to compare, but you can look at customer satisfaction ratings and reviews to get a sense of what each company is like. You can refinance a car loan with a traditional bank, a credit union, or an online lender. You will want to apply to 3-5 lenders so that you can compare and get the best terms. The following documents are typically required when you refinance a vehicle.A Photo ID, such as a passport or driver’s license.Your vehicle’s information, which may include the bill of sale, VIN number, make, model, and year of your car.Proof of income and financial history, which may include pay stubs, banking information, and your credit report.  Proof of residence, such as a mortgage statement, lease agreement, or utility bill. Note that PO boxes are not acceptable as proof of residence.Proof of insurance.Worth noting:Be sure to apply to all of them in a fourteen day window so that they all count as one hit on your credit report! When you use Auto Approve to find your refinance, we handle gathering quotes for you, connecting you with a network of over 50 trusted lenders and a refinance expert to guide you.When Should You Refinance A Car Loan To Get The Most Benefit?So, how do you know if the time is right to refinance your car loan? While you can refinance your car loan at any time, it is more beneficial to do so at certain times. The time is likely right to refinance if:Your credit score has increasedMarket rates have decreasedYour debt to income ratio has improvedYou have had your existing loan for at least six monthsYou have more than two years left on your existing loanYou want to add or remove a cosignerIf some (or all) of these conditions apply to you, the time might be right to refinance. You can refinance before six months, but waiting six months to a year will give your credit score a chance to rebound from your last financing inquiry. It will also give you a chance to establish a good payment history, both of which will help you secure a better car loan APR. New lenders will appreciate seeing your on time payments to your existing car loan.The time might not be right to refinance a car if:Your credit score has decreasedMarket rates have increased significantlyYour debt to income ratio has gotten worseYour loan is brand newYour loan period is almost over.And That’s How—And How Much!—You Can Save By Refinancing Your Car Loan.If you’ve been asking yourself “why do people refinance auto loans?,” the answer is simple—it can save you a lot of money! Want to know whether you qualify? Get started with Auto Approve today to see just how much money you could be saving.Get a quote in 60 seconds.

Here’s the short version: A credit score is a number assigned to a person that indicates to lenders their 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. Credit scores are determined based on factors like how much you owe, how often you’ve made on-time payments, the kind of credit you have (like student loans, credit cards, a mortgage, a car loan, and so on), and how long you’ve had it.Read on for a more detailed look at credit scores, how they’re determined, and how you can change yours. After all, whether you want to buy a house or refinance a car loan, your credit score matters.Credit Scores: Your Complete GuideCredit scores can feel a bit mysterious. How are they calculated? Why do they seem to randomly increase or decrease?Today, we're talking all about FICO scores. Here’s what you’ll learn in this guide:What FICO meansHow credit scores are calculatedWhat causes a credit score to changeWhy good credit is importantHow to increase your scoreIn short, here are all the answers to the most common questions about credit scores.What Does FICO Mean?FICOⓇ stands for the Fair Isaac Corporation (originally Fair, Isaac and Company). Founded in 1956, the company came up with a now-ubiquitous system of scoring consumers to determine their credit worthiness, the FICO score.How Are Credit Scores Calculated?Credit scores are calculated based on 5 different categories. Payment history (35%)Amounts owed (30%)Length of credit history (15%)Credit mix (10%)New credit (10%)All of these categories contribute to your credit score, but some have a lot more weight than others.Payment HistoryDo you pay your accounts on time? Do you miss payments? How many days past due are your bills? These are factors in your payment history score. If your payments are over 30 days late, your lenders will typically report it to the credit bureaus. You want to have a high proportion of on-time, full payments to make your payment history score high. Amounts OwedThe amounts owed category is a mix of how much money you owe, how much money you have available to you, and the number and types of accounts you have. An incredibly important factor in this is your credit utilization ratio, which is a ratio of how much money you owe compared to how much money you have available to you. This ratio should be less than 30%.Length Of Credit HistoryThis category looks at how long you have had open and active accounts. How long have your credit accounts been established? How long has it been since you used certain accounts? The longer you have a history of having open accounts and consistently paying them, the higher your score will be.Credit MixYour credit mix looks at how diverse your accounts are. Healthy credit mixes can include installment loans, mortgages, car loans, credit cards and retail cards. Having a good mix will give you a better score.New CreditThis category looks at how many new accounts you have. If you have a short credit history with many new accounts, this will count against you. What Causes A Credit Score To Change?There are three credit bureaus that calculate credit scores: Experian, TransUnion or Equifax. Creditors typically send updates to these credit bureaus monthly. There are many things that can cause a credit score to change. A missed or late payment, paying off a debt, or closing an account are just a few things that can change your score. But sometimes it feels like you really haven’t done anything different and your score has fluctuated. No missed payments, no closed accounts. Well, the reality is that your score is always fluctuating. This is because if you are consistently paying your bills and consistently using your credit, things are going to shift one way or the other.Here are some of the most common reasons your credit score will fluctuate.You reduced your overall debt. If you have paid down some of your accounts, such as your mortgage or car loan, it reduces your overall debt. This will increase your score even though you haven’t necessarily done anything (besides paying your bills regularly).You reduced your borrowing limit. If you go for a long period of time without using one of your lines of credit, it could trigger the account credit limit to be lowered. This will increase your credit utilization ratio, which will have a negative effect on your score.You paid off a loan. Wait, isn’t that a good thing? Well yes and no. It’s great to have one less bill every month and one less headache, but when the loan is paid off, it affects many parts of your credit score. It will cause your credit mix to change, your overall debt to reduce, and your borrowing limit to reduce. Also, if you paid your account on time it will no longer factor into your score as heavily. Time has passed. Time simply passing will cause your score to change. If you are not keeping your accounts active, it will count against you. A negative event expired. If your house was foreclosed on or you had to declare bankruptcy, this appears on your credit report. And it stays for anywhere between 7 and 10 years, depending on the event. As time goes on, their impact is reduced, and eventually they will be wiped from your report.Identity theft. If there is a big swing in your credit report, it's possible that someone is using your credit to open unauthorized accounts. If you suspect this, request a copy of your credit report immediately and talk to the credit bureau.Why Is Good Credit Important?So we know how credit scores are calculated, but why are they so important? In short: having a good credit score indicates to lenders that you are creditworthy and will pay back your debts. Having a good credit score can help with the following:Lenders will approve you for lower interest rates on credit cards and loansLenders will be more likely to approve youLenders will give you higher credit limitsInsurance companies will give you better insurance ratesLandlords will approve you for rentals more easily You will have more negotiating power for loans and accountsHow Can I Increase My Credit Score?Make on-time paymentsRequest higher limitsPay down debtCheck your reportConsider refinancing If you want to increase your credit score, there are a number of things you can do in the long term and the short term. Make On-Time PaymentsMaking consistent on time payments is the most effective way to increase your credit score. Remember, payment history makes up for 35% of our credit score, so this category is extra important as it carries the most weight. Try to set up for autopay if possible to ensure that you don’t miss a payment.Request Higher Credit LimitsOftentimes, credit cards will raise your limits automatically throughout the years. But it doesn’t hurt to ask for your limit to be raised. Raising your credit limit will raise your available credit and reduce your credit utilization score. This can score you some extra points on your score, as this part of your credit score accounts for 30% of your total score.Pay Down Debt StrategicallyYour credit utilization ratio looks at your overall debt compared to available credit, as well as your debt to available credit for each account. So if you have one account in particular that has a higher ratio, prioritize paying down that debt first.For example, say you have two credit cards. One has a limit of $20,000 and a balance of $5,000. The credit utilization ratio for this account is 25%. The other credit card has a limit of $10,000 and a balance of $3,500. The credit utilization ratio for this account is 35%. You should prioritize paying down the debt on the second card to reduce that credit utilization ratio.Check Your Credit Report And Dispute ErrorsYou should get in the habit of requesting your credit report three times per year. It is free to do so once per year from each of the three credit bureaus. When you get your report, look over everything carefully. Cross check your payment records and credit limits and make sure nothing is misreported. This will also help you catch any fraudulent activity that may be brewing.If you notice any issues or irregularities, report them to the credit bureaus immediately. They have 30 days to investigate and respond, so the sooner you report any issues, the better.Refinance Your Car LoanYou are probably wondering, “Wait, does refinancing affect your credit score?” – and the answer is yes. In fact, a great way to improve your credit score is to refinance your car loan. It will not instantly raise your credit score (on the contrary, the hard inquiry on your account will temporarily ding your score). But refinancing your car loan can help you out in the long run. Refinancing your car loan when market rates are low will help you secure a lower car loan APR. And this can save you lots of money every month, not to mention overall. It will ultimately free up more money every month so that you can pay off other debts and ensure that other payments will not be late. And That’s Everything You Need To Know About Credit ScoresPut in the time and effort to make sure you have a good credit score. It will pay off tenfold in the long run. If you have a good credit score but want to bump it up to the next level, consider refinancing your car with Auto Approve. We can help you save loads of money every month, and who couldn’t use some extra cash?GET A QUOTE IN 60 SECONDS

Here’s the quick version: Understeer and oversteer are terms used to describe how a moving vehicle takes turns.Understeer is when the vehicle doesn’t turn as much as it needs to or feels like it should—you have to turn the steering wheel more than you’d expect.Oversteer is when a vehicle turns more than you want it to—it seems extra sensitive to steering.Read on for the longer answer and an explanation of how oversteering and understeering happen, and how it might affect your choice of vehicle when buying a new or used car.Oversteer vs. Understeer: Your Complete GuideIn this article, you’ll find answers to the following FAQs and common concerns about oversteer and understeer:What are oversteer and understeer?What causes a vehicle to understeer?What causes you to oversteer?Which is better, oversteer or understeer?Which vehicles are more likely to over or understeer?What that means for your choice of vehicle when buying a carHere’s what you need to know.What are oversteer and understeer?Oversteer and understeer are terms used to describe a vehicle’s response to steering and sensitivity to changes in steering angle when combined with acceleration. Basically, they describe what happens when something doesn’t go quite right when you’re turning.What causes a vehicle to understeer?Understeer happens when your vehicle loses traction on its front wheels and doesn’t turn as much as you expect it to. It looks like going straight when you want to turn, or taking an extra wide turn. As an example, understeering might happen if you start accelerating too early while turning, in which case you’d need to gently slow your acceleration.What causes a vehicle to oversteer?Oversteer happens when you lose traction on the back wheels of your vehicle and it turns too much, with the back of the vehicle swinging out further than you might want it to. It looks like turning more than necessary, or “drifting.” For example, you might end up oversteering if you take a turn too fast or brake sharply, in which case, you’d need to steer against the slide—similar to what you’d do if you found yourself sliding on ice or hydroplaning.Which is better, oversteer or understeer?That’s contextual! Oversteer is sometimes considered better for performance driving, like racing, because it allows the vehicle to make sharper turns and more easily accelerate out of a turn. However, for general driving on public roads, understeer is preferred, because it’s safer than spinning out on the road. If you panic while understeering, you’ll likely go straight forward, meaning any collisions are typically taken by the front of the car, which is designed to take more impact. Which vehicles are more likely to over or understeer?Oversteering and understeering are caused by how weight is distributed in a vehicle and tire condition.Rear wheel drive vehicles, like sports cars, are more likely to oversteer, while front wheel drive vehicles, like most common sedans and hatchbacks, are more likely to understeer. AWD and 4WD vehicles vary, with some modern models built to mitigate either effect, but they generally tend toward understeering too. Smooth driving, especially when turning, and making sure you have the right tires for your roads (kept in good shape!) are the best way to avoid under or oversteering.Thinking about oversteer and understeer when buying a carIf you’re worried about having a vehicle that’s prone to understeering or oversteering, here’s what you need to know.Understeer is generally safer, so you probably don’t want a sports car or other rear wheel drive vehicle if you’re concerned.Choosing the right tires is as important as the make and model of your chosen vehicle.Driving safely and smoothly is a good way to generally avoid either effect under most circumstances, especially if you have well-maintained, weather-appropriate tires.Keeping your vehicle well-maintained so you know if anything isn’t quite right can also help and is always a good idea.You can look into any specific models you’re considering buying before signing to find out if they have a known tendency to over or understeer.Bonus tip: If you’re thinking about buying a vehicle, read our guide to dealership markups and negotiate to get a better rate.And that’s everything you need to know about understeer versus oversteer.Use this quick and handy guide to stay a little safer on the road and understand the mechanics of what happens when a vehicle understeers or oversteers.Paying too much on your vehicle loan?We’re Auto Approve, by the way. Auto Approve is your auto loan refinance partner, helping you find the best rate available to you and handling the paperwork to make lowering your monthly car payment quick and easy. Whether you’re thinking about a new vehicle or locked into a loan, when you’re ready to refinance, Auto Approve can help.Get your free, no-commitment quote right now.