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With car loan interest rates still at a record low, car refinancing is more popular now than ever. And for good reason – in the past two years, car loan interest rates have dropped almost 1.5% on average, which adds up to a lot of savings. Many people are eligible for lower car loan APRs than they ever thought possible.But when it comes to actually refinancing your car loan, how do you know who to trust? Which car refinance companies are the most reliable? Today we are talking about how you can refinance your car loan to start saving money, and how you can decide which car refinance company is right for you.What is needed to refinance a car?The good news is that refinancing your car loan is actually very easy. With a little preparation and research you could be saving money in no time.Review your current loanIn order to refinance your car loan, you will need to first take a look at your existing loan. Be sure to look at the following terms of your agreement:Current monthly payment The remaining balanceThe amount of time left to repay the loan in months (the loan term)The interest rate Prepayment penaltiesYou want to be sure that you have all of this information available when you go to apply for refinancing. Not only will you be required to provide this information, but it will help you to decide if it is worth it to refinance. Auto loan lenders sometimes charge prepayment penalties to dissuade people from paying off their loans early, so you want to be sure that any penalties you may be responsible for are not going to outweigh the amount of money you will save.Gather your documentsGetting all of your required documents together ahead of time will help ensure that the application process goes smoothly. You will likely need the following documents to apply for an auto refinance. Your 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, such as 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. Place all of these documents in a secure location. If you will be applying online, scan all of your documents onto your computer for easy access.Check your credit score and reportBefore you apply, you want to know the condition of your credit score and credit report. After all, the car loan APR that you are offered will depend heavily on your credit score. Request a copy of your credit report – which you can do once per year for free – and review it carefully for any errors. Is everything accurate and up to date? Is anything misreported? If there is anything that is not accurate, contact the account associated with the mistake. You can also petition the credit bureau if there are any inconsistencies or errors. The higher your credit score is, the lower the APR that you are offered will be. Research lenders and applyUntil you apply for auto refinance, you will not have specific offers to compare. But you can still do your research ahead of time on customer satisfaction. Research different refinance companies and lenders and pick three to five based on average rates and customer reviews. Using a company that specializes in auto refinance, like Auto Approve, can simplify this for you a great deal. By using their existing relationships with lenders, they can expedite the application process while securing the best rates possible.  Complete all of your applications around the same time so that it will only count as one hard inquiry hit on your credit report. Compare, sign, and saveOnce you have your offers, you can compare to see what is the best fit for you. Be sure to consider the following:Interest Rates Repayment PeriodCustomer ReviewsMiscellaneous FeesPrepayment Penalties – There are no limits to the amount of times that you can refinance your car, so make sure you don’t agree to prepayment terms that you may regret in the future.Once you compare all of the offers, decide which is the best fit for you. Then just sign on the dotted line and let the lender take care of the rest! They will contact your old lender to make payment on your loan.Is refinancing a car worth it?While auto loan refinance is super easy, you may be wondering if it’s worth it. And the answer depends on your personal situation.You should refinance your car loan if your score has improvedIf your credit score has improved since your initial financing, you may be eligible for a much lower car loan APR. Credit scores are one of the most important considerations in car loan APRs, so the better your score is, the better the offered interest rate will be. Your credit score may have increased if:You have been making consistent, full, on-time paymentsYou have had a negative event expire (like a bankruptcy)Your credit limit has increasedYou haven’t had a lot of credit inquiriesYour credit utilization score has increased. Small changes to any of your credit categories can end up having a big effect on the car loan APR you are offered. Sometimes just the passing of time can cause your credit score to increase, so it’s worth checking on your score periodically.You should refinance your car loan if the market rates have droppedCar loan rates have dropped significantly in the past two years, so chances are the market rates are lower now than when you initially applied for car loan financing. You should refinance your car loan if cash is tightIf you are short on money every month for one reason or another, refinancing your car loan can provide a bit of breathing room for you. By either refinancing your car loan to a lower car loan APR or by lengthening your repayment period, you can significantly lower your monthly car payments. If you are having trouble keeping up on payments, refinancing your car loan to make your payments more manageable may actually help your credit score in the long run.You should not refinance your car loan if your current loan is underwaterIf your current loan is underwater (meaning you owe more on the car than the car is worth), you should not refinance your car. You will most likely not qualify anyway. You should not refinance if you have less than a year left on your current loanAs you near the end of your repayment, car loan refinancing becomes less and less beneficial. Most companies will not refinance your loan if you are near the end of the term, but even if they do, it’s probably not worth it for you. The various fees will most likely outweigh the minimal savings that you may have. You should not refinance your existing loan is less than 6 months oldWhile this is not a hard and fast rule, experts recommend waiting six months to a year before refinancing your loan. This will give your credit score a chance to rebound from your initial financing. Where is the best place to refinance a car?If the time seems right to refinance your car, you want to know which car refinance companies are legit and which companies can get you the best auto refinance rates. While you can refinance your car through many different lenders, including traditional banks, credit unions, online lenders, and car dealerships, it’s best to use a company that specializes in car loan refinancing.Using a company that specializes in auto loan refinance has many benefits. They know the refinance industry better than anyone else and are more equipped to guide you through the process. They make applying super easy and can help match you to the lenders that are best suited to your needs. By handling the applications for you, you can save a ton of time on paperwork (who has time for endless amounts of paperwork?). And when the offers start coming in they can help answer any questions and help you to make the best decision.At Auto Approve, we are dedicated to making the auto refinance process quick and easy. We are just really passionate about saving people money. So if the time seems right for you to refinance your car loan, know that you will be in good hands with Auto Approve. Just ask our customers – Auto Approve has a 96% would recommend rating on LendingTree and over 2,200 five star reviews on TrustPilot. Now is a great time to refinance your car loan, and Auto Approve makes the refinance process quick and easy.So don’t wait any longer to start saving money.GET A QUOTE IN 60 SECONDS

Refinancing your car loan can be a great idea for a lot of reasons. If you are like most people, you are probably overpaying significantly on your car payments every month. Maybe you got talked into a bad deal, or maybe market interest rates were higher when you originally financed your car loan. But no matter what the reason, your best solution is most likely to refinance. Car loan refinancing has a lot of benefits, but you may be wondering “does refinancing a car hurt your credit?” Refinancing your car loan will cause your credit score to take a temporary dip, but it’s unlikely to hurt your credit score in the long run. In fact, refinancing your car will probably increase your credit score over time.Does Refinancing a Car Lower Your Credit Score?Refinancing a car loan is when you pay off your existing car loan with a new loan, ideally a new loan that has better terms and a lower car loan APR. So how exactly does car refinancing affect your credit score? To understand this, we must first look at how credit scores are calculated.Credit scores are three digit numbers that tell lenders how likely a person is to repay their debts. The scores range from 350-850 and are calculated by taking into account the following factors on a person’s credit report.Factor #1: Payment HistoryYour payment history makes up 35% of your credit score. Do you make your payments on time? Are your payments in full? Are they consistent? This section of your credit report will show lenders how dependable you are when it comes to paying your debts. It will show any missed payments or bankruptcy details.Factor #2: Accounts Owed Your accounts owed make up 30% of your credit score. How much money do you owe compared to how much money you have available to you? This section shows lenders if you are responsible with the credit that you have available to you. This section looks at your credit utilization ratio, which is a ratio of your total debt compared to your total credit available. The lower your ratio is, the higher your credit score will be. Typically lenders like to see that this number is below 30%.Factor #3: Length of Credit History The length of your credit history accounts for 15% of your credit score. The longer you have had credit, the higher your score will be. This shows lenders that you have good and steady relationships with your existing accounts.Factor #4: Credit Mix Your credit mix 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. This shows lenders that you can balance your payments between multiple accounts.Factor #5: New CreditYour new credit accounts for 10% of your credit score. If you open a bunch of new accounts, you will be flagged for a lower score. This indicates to lenders that you have new debts that may change your ability to repay.How refinancing affects your credit scoreSo how does refinancing your car loan affect these categories? Car refinance will affect two main categories on your report: your history length and your new credit. When you open a new account, it will shorten your credit history length. It will also count as a new credit and the hard inquiries will be noted in your credit report.Note: A hard inquiry occurs when a lender asks to see your credit report. It counts as a ding on your credit report because it shows that you are seeking a debt that is not yet noted in your credit report. BUT. Hard inquiries only stay on your credit report for about a year, so it is a temporary ding. Credit bureaus also know that people need to shop around for loans, so they allow a two week timeframe where all inquiries on your credit count as one hard inquiry. Don’t let a fear of multiple hard inquiries prevent you from applying to different lenders for your car refinance. Your credit score will most likely take a slight dip when you refinance a car loan. Refinancing your loan may still increase your credit score in the long run however. Refinancing your loan to a lower car loan APR can save you a significant amount of money each month. So if you have been struggling to make payments, a refinance can ease that burden and allow you to make more consistent and on time payments, increasing your payment history score. If you refinance your car and change your repayment period, you can also significantly reduce your monthly payments and give yourself more breathing room every month. This will also help improve your ability to make consistent on time payments.If you do not have a good mix of credit, adding in a car loan can be beneficial to your credit mix as well.When Is It a Good Idea To Apply For A Car Refinance?It is a good idea to apply for a car refinance if any of the following apply to you:Your credit score has improvedIf your credit score has improved since your initial financing, there’s a good chance you will qualify for a much lower car loan APR. Market rates have decreasedIf the market rates have decreased in general (which they have, significantly, in the last two years), you may be eligible for a lower car loan APR, even if your credit score hasn’t changed.You were talked into a bad deal initially, or agreed to dealer financingYou may have gotten into a bad deal in the first place and agreed to a high car loan APR. This is especially common with dealer financing. But if you pursue car refinance, you can change these terms.You need to add or remove a cosignerIf you would like to either add or remove a cosigner from your car loan, you will need to refinance your car loan. Lenders will not simply add or remove someone from the loan, as each offer is tailored specifically to each applicant. Removing one person or adding another person could greatly change the prospect of repayment in their eyes.You need extra cash every month If you need extra cash every month, refinancing your car loan can help you out. Even if you don’t qualify for a lower car loan APR, you can change your repayment plan. By changing your repayment plan, you are adjusting the amount of time that you have to pay the money back. When you extend the repayment period, your monthly payments will automatically decrease.But the time is not right to refinance if…There are a few times when it will not be worth it for you to refinance your car loan. You have less than one year left on your existing loan. You will most likely not qualify for car loan refinancing. You just financed (or refinanced your car). Experts suggest waiting at least six months to let your credit score bounce back.You owe more on your car than the car is worth. If this is your situation, your loan is considered underwater and will not likely qualify for refinancing. Your car has over 100,000 miles. Lenders have certain restrictions for the cars that they refinance, and if the car is too old or has too many miles, they will not want to refinance your car loan.Which Car Refinance Companies Are Legit?If the time seems right for you to refinance your car loan, you are probably wondering which car refinance companies are right for you. While you can reach out to lenders directly and handle all of your applications by yourself, it is much easier to use a company that specializes in auto refinance, like Auto Approve. Using Auto Approve to refinance your car loan can help you in a number of ways:They have existing relationships with lenders to get you the best offers possible.Auto Approve never marks up their rates; they pass the savings right on to you.All you have to do is fill out some information and Auto Approve handles all the rest.You can have offers in minutes.Auto Approve has a high customer satisfaction rating, so you know you’re in good hands.Auto Approve even handles the DMV paperwork.Not all car refinance companies are as reliable or as effective as Auto Approve. That’s why we have a 96% would-recommend rating on LendingTree, as well as an A+ rating from the Better Business Bureau. Refinancing your car loan couldn’t be easier with Auto Approve.Refinancing your car loan may cause a temporary decrease in your credit score, but it can save you money (and ultimately may increase your credit score) in the long run.So if the time is right for you to refinance, don’t wait any longer! Start saving today with Auto Approve!GET A QUOTE IN 60 SECONDS

Getting a new car is always an exciting time, but it can also feel a little overwhelming. And this is especially so if you are looking to lease a car for the first time. Today we are talking about the must-ask questions of car leases. But before we get to those, let’s talk about how car leases work.When you lease a car, you are essentially renting the car. The monthly payments are based on the projected depreciation of the car over the time that you are using it. Since you are not buying the car, you do not have equity at the end of the lease term. Instead you have to either return the car or look into a lease buyout.There are a lot of positives and negatives when it comes to leasing a car. On one hand, you do not own the car outright so a lot of the maintenance and repairs that come with car ownership will be handled by the dealership. But on the other hand, since it’s not your car, you are not able to customize the car, sell it, or drive it as freely as you may like.Leases can vary greatly from dealership to dealership and from car to car.Here are the top three questions you should ask when looking to lease a car.How Long is the Car Lease?A major variable in car leases is the length of the lease. A typical car lease is three or four years, but can vary between two and five years. You want the lease period to be as long as or less than the warranty period. This way if something goes wrong while you are leasing it, it will be covered by the warranty. If your warranty expires before your car lease has ended, you will be on the hook for the repairs (which can be quite costly).If you are interested in a longer car lease, you are probably better off buying the car. In that case, even if you are paying for repairs and maintenance, you have an asset that you can use for years after the payments end (or you can always sell it).How Many Miles Does The Lease of the Car Include (And What Happens When I Go Over)?Another big question to ask is about the mileage limit on your lease. Car leases always have mileage limits, such as 10,000 or 12,000 miles per year. If you happen to go over that limit, it can mean hefty fines. Most leases have fees of 15 cents to 20 cents per mile over. So if you drive a lot, you are going to pay a lot in overage fees. For example, if you drive 15,000 miles per year every year for your three year lease period, and your mileage limit is 12,000, you could be paying $1,800 in overage fees at the end of your lease.Leasing a car is not for everyone. If you are someone who drives a lot, leasing might not be a practical option. If you are already leasing a car and have gone over the mileage limits (or know you are going to exceed the allotted mileage), it might be worth considering an auto lease buyout. You could save yourself a lot in overage fees and own the car instead.What Other Fees Does The Car Lease Have?On top of the mileage fees, you should be aware of other fees that may be in the lease. In fact, car leases tend to be full of hidden costs. What are often advertised as car lease deals usually don’t include the fees, fees which can add up substantially. You want to read your lease agreement very carefully and be sure to clarify any sticking points with the dealer. Here are some additional fees that you can expect.The Drive-Off FeesThe drive-off fees are the upfront costs of your lease. This is a combination of the down payment and any additional fees, such as registration fees. When you buy a car, you want to put a lot of money down upfront to offset your monthly payments. But this is NOT the case when it comes to leasing. In fact, you want to put as little money down in the beginning as possible. The way that lease payments are constructed, you do not save a lot of money by paying more upfront. And if your car were to be totaled, there’s no guarantee that you would get that money back (unless you purchase GAP insurance, which is always a good idea with leases).The Wear and Tear FeesWhat does the dealer charge you for wear and tear? When you return the car at the end of the lease period, there is some leeway for the condition of the car. A few slight scratches or stains can be expected after a three or four year car lease. But if there is anything that they deem beyond the normal realm of wear and tear, they might charge you a good deal. Ask about their wear and tear policy before you sign on the dotted line.The Administrative FeeDealers can hit you not once, but twice with an administrative fee. They often charge you an administrative fee when you initially lease the car, and then again when you return the car. And this fee commonly runs between $500 and $750 each time.The Termination FeeIf you need to end your lease early for any reason, there is most likely a hefty termination fee. Be sure that you are comfortable with this fee amount  – you never know when an emergency will pop up and you’ll need to end your lease for one reason or another.The Security DepositMany dealerships will have you put down a security deposit on your lease. This is intended to cover the excessive wear and tear. You may get it back, or you may not. Dealerships can make a good argument to keep the security deposit even if your car is in pretty good condition.And those are the top three questions you should ask when leasing a car.Leasing a car can be a great option for some people, and not a great option for other people. Look carefully at your driving habits before signing any lease agreements, and be sure to read all of the fine print when it comes to fees and hidden costs.If you have a car lease and are interested in buying your lease, Auto Approve can help! Contact us today to see how we can help you with an auto lease purchase.GET A QUOTE IN 60 SECONDS

When you buy a car, a down payment is usually part of the routine. Having a down payment when you buy a car can reduce your payments significantly and also help ensure that your car loan doesn’t end up underwater.But what about when you refinance a car? Do you need a down payment then? Today we are answering all of your questions about down payments, equity, and how you can refinance car loans.Is Equity an Auto Refinance Requirement?First up, let’s talk about down payments, equity, and how they relate to each other.A down payment is money you pay upfront for the car you are buying (essentially your first payment on your new car). Most of the time lenders require down payments, but even if it is not a requirement, it might be a good idea. (Providing a down payment will decrease your monthly payments and reduce the possibility of your car loan becoming underwater.)Equity on the other hand is the difference between your auto loan's balance and how much your car is currently worth. Down payments are not required for an auto refinance, but equity is required. This simply means that you do not need to put down any additional money on your loan, but the lender wants to know that there is value in the car that you are refinancing. Car loans are secured loans, meaning that if you defer on your car payments and can no longer afford them, the bank can take your car as collateral. If you owe more on the car than the car is worth, the lender will ultimately lose money. And that is their biggest no-no. So unless your car has equity, they will not risk refinancing your car loan.So how do you know if your car has equity? Look at the current amount that you owe on your loan, and compare it to the current value of your car. You can determine the current value of your car by using a website such as Edmunds or Kelley Blue Book. These websites take into account your car’s make, model, year, condition, and mileage, and can give you an approximate value. If you owe more on your car than it is valued at, you are most likely in an underwater loan and will have a difficult time refinancing your car loan. But if you owe less than the car is worth, your car has equity and will likely qualify for refinancing. What Are The Other Requirements To Refinance Your Auto Loan?Your car has to be worth more than you owe in order to refinance auto loans. But what are some other requirements for auto refinance?A Good Credit ScoreHaving a good credit score is important when it comes to refinancing your car loan. It’s not impossible to refinance your car loan with a less than great credit score, but it is harder, and it might not be as worthwhile. Credit scores take five main categories into account:Payment history (35%) Amounts owed (30%) Length of credit history Credit mix (10%) New credit (10%) The most important categories of your credit score are the payment history and the accounts owed, making up 65% of your score. Focusing on improving these areas can help boost your credit score. Lenders reserve the lowest car loan APRs for those with the highest credit scores.Your Current Loan’s TermsThere are a few terms in your current loan that will dictate whether or not you can refinance your car loan: the prepayment penalties, the time left on your loan, and your current payments.The prepayment penaltiesSome car loan agreements have prepayment penalties. After all, these lenders won’t be making as much money off of you if you leave to refinance, so they tack on extra fees to help make some extra money. This can vary greatly based on your loan. Be sure to read the fine print of your contract carefully to determine if the penalties will outweigh the savings of auto refinance. The time left on your loanIf you have less than a year left on your current car loan, you will have a difficult time finding a lender to refinance your car loan. Car loans are front loaded, amortized loans. This means that in the beginning of the loan, you are paying mostly interest, and towards the end of the loan, you are paying mostly principal. So the closer you are to the end of your loan, the less interest you are paying. Lenders don’t want to refinance your loan when they will not be making money off of you, so the closer you are to the end date, the less likely you are to find a lender who will refinance your car.Your current paymentsMaking on time, full, consistent payments is very important for your credit score. But it is also important for lenders to see this specifically in relation to your car loan. They want to know that you consistently pay your debts and are able to handle your car payments without issue.Where Can I Get The Best Auto Loan Refinance For Me?If you are overpaying on your car loan (and trust us, you probably are), you may be wondering where you can get the best auto loan refinance. You want to make sure to look around at different lenders (include a mix of traditional banks, online lenders, and credit unions). You will not be able to compare actual rates and terms until you apply, but you can get a preliminary idea from customer reviews as to what to expect.When you pick a few different lenders (aim for 3-5), apply to them all at once. When the offers start coming in, compare the following.Interest ratesPayment termsPrepayment penaltiesCustomer satisfaction ratingsHidden feesThe interest rate is the most important factor in your auto refinance, but be sure to take everything else into consideration as well. When you decide which lender is best for you, you can sign and start saving!At Auto Approve, we specialize in auto refinance, so you know we can get you the best auto loan refinance available. We have relationships with some of the best and most competitive lenders across the country. But don’t just take our word for it – our customer reviews speak for themselves (not to mention our A+ rating from the Better Business Bureau).You do not need a down payment to refinance your car loan, but there are some other requirements you need to consider.If you're ready to get started with auto refinancing, get your free, no-commitment quote from Auto Approve today!GET A QUOTE IN 60 SECONDS

College has never been more expensive, and never felt so financially unattainable. As of early 2022, the average college graduate had $39,351 in student loan debt, growing by over $5,000 in just two years. In the United States, the total student loan debt is about $1.75 trillion. It’s overwhelming to think about how these costs may continue to climb in the future.If you are a parent, it can be scary to think about how you will help your child afford it. But preparing early and doing your research can pay off tremendously when it comes to creating a college fund. So today we are talking about what you can do to start saving money for your kids’ education. Here are our top five tips to start saving for college.Start as early as possible.It is incredibly important to start saving early. The earlier you start, the more time your money will have to work for you, allowing you to grow your college fund as much as possible. Plus, if any of the college funds you select have a yearly maximum contribution, it will give you more time to add to the fund.Determine how much you should save.When you create a budget, it’s always a good idea to have a solid number goal in mind. But how can you even begin to estimate how much money you will need to save? You must take into account what state you live in, what college your child is thinking of attending, and what the living expenses might be. This helpful online calculator can help give you an idea of how much money you should plan on saving. Choose a college savings plan.There are a lot of options out there for college savings plans. Look around at all the pros and cons to determine what will work best for you. Education Savings Account (ESA) or Education IRAThese accounts are very similar to a Roth IRA, but they are intended for education. With these accounts, you can invest up to $2000 per year, tax free. They have a much higher rate of return than a regular savings account, and although the amount you can contribute is capped, it can still add up to a sizable college fund. At a rate of return of 12%, if you started investing when your child was born you could save over $125,000 by the time they go off to college. Note that there are income limits for these types of accounts. These accounts can be used to pay for any education-related expenses, including tuition, vocational schools, and textbooks. The money must be used by the time the beneficiary turns 30.529 Plan529 plans are often state sponsored, and can be used for future education. These plans vary greatly from state to state, but generally there aren’t any income restrictions and you can invest up to $300,000 per year. You want to make sure that you have a flexible plan that will allow you to stay in control of how the money is invested. Some of the 529 programs will freeze or automatically adjust your investments, which is not ideal, so be sure you understand what type of 529 you are opening.These accounts can also be used to pay for any education-related expenses, including tuition, vocational schools, and textbooks. UTMA or UGMA (Uniform Transfer/Gift to Minors Act)This type of account is not education specific. Insead, you are essentially opening a mutual fund that will transfer to your child when they turn either 18 or 21. It’s a great option to save, but the money can be used for anything when your child receives it, whether it’s for tuition or that shiny sports car they’ve always wanted.Savings BondsInvesting in savings bonds is a very low risk option for college savings. But with such low risk, there is also low reward. You will earn more than in a traditional savings account, but not that much more. Right now fixed rate bonds earn about .1% annually. Plan your budget and look for ways you can contribute more.Once you’ve figured out how much you want to save and what type of fund (or funds) you will start, now it’s time to make it a reality. For an in-depth look at creating and maintaining a budget, check out our post here. Creating a budget doesn’t have to be super complicated. Just follow our simple steps below to get started:Determine your income. Calculate your take home pay (your pay minus any taxes and deductions). Add in any additional income you may have (property rentals, dividends, tips, etc.) This is your total income.Determine your expenses. Add up your fixed expenses, which are the expenses you have that do not change from month to month (rent, mortgage, cable bill, internet, subscription services, etc.) Then add up and average out your variable costs, which are expenses that do change from month to month (groceries, electricity, entertainment, etc.) These are your total expenses.Compare. Look at the differences between your income and your expenses. How much of a gap is there? Are you saving every month or are you losing money every month?Look for more ways to save. Looking at your budget can help you see where you have wiggle room to trim some fat. Some common ways to free up some money every month include:Canceling unused subscriptions.Cutting back on dining out and entertainment.Buying generic brands at the grocery store.Refinancing your car loan (refinancing your car loan to a lower rate can loosen a lot of money every month and make a big difference in your budget).Extra money that you save every month can be allocated to your college fund. You know how much money you want to save, so use that number to determine how much you should be saving every month or every paycheck.Note: Saving for college is important, but don’t neglect your other responsibilities. Don’t shirk paying off your debts or building an emergency fund: instead try to divide up your extra money every month and do what makes sense for your situation. A healthy budget is about balance.Encourage your kids to be proactiveOf course we want to help our kids as much as possible to get a good head start for the future. But it is their future and their education, so it’s important to encourage them to take an active role in saving for college and investing. Here are some things that your kids can do to help fund their education. Open a Savings AccountTeaching kids early about saving is tremendously beneficial. Help them open a savings account so they can start saving at a young age.Get a JobWhether it's a part time job at night or on weekends, or a summer job, encourage them to start working as soon as they are able. Not only will it help them save some money and get some real world experience, it will also be a nice addition to their resume.Apply for ScholarshipsThere’s money out there for students, you just have to look for it. There are a ton of resources online and through your child’s school that will help them find scholarships for which they may be eligible. Even small scholarships can add up quickly.Apply for AidYour child should apply for federal aid when they are applying to college. Filling out the Free Application for Federal Student Aid, or FAFSA, helps colleges determine how much money they can offer your child. This may be in the form of scholarships, state aid, school aid, student loans, or work study. Read carefully to make sure they are not just student loans, which may or may not be beneficial for your child.Take AP classesIf your child  scores high on your AP classes, they can get college credit. And those are credits that they would normally be required to take (and pay for) at college. Take advantage of these classes in high school and make sure the colleges they are applying to take AP credits. They can easily save thousands of dollars (and possibly skip a semester) if they are proactive with their AP courses.Those are our top tips to start saving for college.Being proactive and starting to save for college can be very overwhelming, but we hope this helps you get started. A little investment early on can go a long way and pay off tremendously.If you are looking for more ways to save, consider refinancing your car loan with Auto Approve. Market rates are still low and you may qualify for a lower car loan APR, which can save you lots of money every month (money that could go straight into that college fund!) If you are thinking about refinancing your car loan, don’t wait!GET A QUOTE IN 60 SECONDS

We know that an auto refinance can save you a ton of money. We know that it can lessen your monthly payments and give you some breathing room. And we know that it’s a great way to change any terms in your car loan that aren’t beneficial to you. But how do you apply for an auto refinance? Today we are talking about the process of applying for an auto refinance and getting into the nitty gritty details. The Steps You Need To Take to Refinance Your Auto LoanThe good news is that it’s actually really easy to refinance. Auto loan refinancing is actually much simpler than mortgage refinancing, and can easily be done in a few hours. As with everything, preparation is key. So let’s get into the steps you need to take to refinance your car loan.Review your current loanLook at your current loan contract and review your current terms. Make sure you know the following:Current monthly payment The remaining balanceThe amount of time left to repay the loan in months (the loan term)The interest rate Additionally, make sure you are aware of any penalties for which you may be responsible. Some car loans have prepayment penalties that you will be responsible for if you end your contract early. Call your lender directly if you have any questions or want to review any of the fine print. Knowing your current loan terms will help you decide if a car loan refinance is worth it.Collect your documentsWhen you apply for an auto refinance, you will need to have all of your documents in order. Gather the following so you are as prepared as possible: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. If you are applying online, scan and upload all of your files so they are easy to access.Check your credit score and reportThe car loan APR that you are offered will depend heavily on your credit score, so you want to make sure that your credit score is in good shape. Request a copy of your credit report (which you can do once per year for free) and review it carefully for any errors or mistakes. Be sure that everything is accurate and up to date on your report. You can petition the credit bureau if there are any inconsistencies or errors. Remember, the higher your credit score is, the lower your rate will be. Being thorough in your credit report review can save you a lot of money. Research lendersWhile you will not have any offers to compare until you actually apply, you can do initial research to decide which lenders will be beneficial. Look around online for different credit unions, traditional banks, and online lenders. See what some of the average rate offers are, and look carefully at the customer satisfaction ratings. We recommend applying to three to five different lenders. To simplify this, you can use a company that specializes in auto refinance, like Auto Approve. We have existing relationships with the best lenders across the country, so you don’t need to research a million companies to know that you are getting the best deal around. All you need to do is fill out your information, and we handle the rest!Apply to lendersBe sure to apply to all of your lenders within a fourteen day period. This will ensure that all credit inquiries only count as one hit on your credit report. (If you use Auto Approve, we take care of all of this!)Compare your offersWhen the refinance offers start coming in, compare all of the rates and terms. What is the interest rate being offered? What is the repayment period?Are there prepayment penalties? There is no limit to the amount of times that you can refinance, so make sure you don’t agree to prepayment terms that you may regret in the future.Does the lender have good customer reviews? Do customers seem happy with their communication and transparency?Do the math and be sure that your new savings will offset any prepayment penalties for which you may be responsible.Sign and Start Saving MoneyOnce you have compared all of your offers and picked the best car refinancing option, simply sign on the dotted line and start seeing the benefits of refinancing immediately. (And if you use AutoApprove to refinance your car loan, we will even handle the boring DMV paperwork so you don’t have to!) How Do I Know If my Interest Rate is Good on my Auto Loan Refinance?The main benefit of auto loan refinance is that you can secure a lower car loan APR and save a lot of money. You should consider refinancing in the following situations:When interest rates are low. Interest rates are adjusted based on how the economy is performing. If the economy is not performing well, or is anticipated to not perform well, banks will lower their interest rates to encourage spending. If interest rates are lower than when you first took out your auto loan, it may be a good time to consider refinancing. (Hint: rates are low now, so it’s a good time to refinance)When your credit score has improved. Your credit score is a major factor in the car loan APR you will be offered. The most favorable rates and terms are given to those with very good and excellent credit. Even if your score has increased within your bracket, but you haven’t crossed into a better category, it still might be worth getting a few quotes and seeing if you can get a better rate. When your income has decreased or your expenses have increased. If money is tight, refinancing can provide some much needed breathing room. You can either get a lower car loan APR which will automatically reduce your monthly payments, or you can lengthen your payment period so that you will pay off the loan over a longer period of time (therefore reducing your monthly payments). Either way this can free up your monthly budget.Auto refinance sounds like a good option, but how do you know if your interest rate is good? The quick and easy way to know if your auto loan refinance rate is good is to ask yourself, “is this auto loan refinance rate lower than my existing rate?” If it is lower, then it’s probably worth refinancing. Always be sure to do the math to determine how much money you will save over the course of the loan repayment term. The car loan APR that you are offered depends on a number of factors:Your credit score. Your credit score tells lenders how likely you are to repay your loan, and repay it on time. There is no magic number, but the higher your score is, the better your offered rate will be. Your income. Lenders consider what’s called your debt to income ratio (DTI) which compares your monthly debt payments to your monthly income. The lower the ratio, the better your rate will be.Your vehicle. Lenders look at your car’s loan-to-value ratio (LTV) calculation to determine if your vehicle qualifies for refinancing. The LTV will help lenders decide if they can recoup their losses should you default and they need to resell your car.Lenders consider all of these factors to determine if you qualify for an auto loan refinance and what car loan APR you should be offered. What Are The Best Auto Refinance Interest Rates Today?The auto loan refinance rates are still incredibly low right now. So if you want to get the best auto refinance rates, you should consider refinancing as soon as possible.The Fed has announced that it will be increasing interest rates throughout 2022, so the sooner you refinance, the better. You can get the best rates by shopping around and doing your research. But we can save you a lot of work and hassle by handling this for you. All you need to do is collect your documents and answer some simple questions, and we will handle the rest! So if you are looking for the best auto refinance rates today, look no further than Auto Approve.And that’s how you apply for an auto refinance.The time has never been better to refinance your car with Auto Approve. But don’t just take our word for it. With a 96% would recommend rating on LendingTree and an A+ rating from the Better Business Bureau, you know you are in good hands. So don’t wait any longer! GET A QUOTE IN 60 SECONDS

Leasing a car has a ton of benefits, especially if you are the type of person who loves having a new car every few years. And leasing a car is pretty popular these days – according to Experian, about 26% of new cars are leases.But how much does it really cost to lease a car, and how do you know whether you should lease or buy a car?Is it Better to Lease or Buy a Car?Leasing a car is essentially renting a car; you pay for the time that you are using it and the depreciation that occurs, but then you return the car at the end of the lease. So which is better, lease vs buy car?Pros of Leasing a CarThere are a lot of advantages when it comes to leasing a car. Some of these include:You will have lower monthly paymentsThe lease agreement covers a good deal of the maintenanceThe lease agreement covers some repairsYou will never need to deal with the hassle of selling your carYou can get a new car every year Leasing a car is generally good for people who do not drive too much, do not want to be bothered with maintenance and repairs, and like to have a new car every few years.Cons of Leasing a CarOn the other hand, there are some notable disadvantages to leasing a car. Some of these include:You do not build equity because you do not have the car as an asset at the end of the leaseThere will be mileage limitsThere will be usage restrictions – you may be prohibited from using the car for rideshares or from leaving the country with the car You cannot customize the car in any way – no paint jobs, tinted windows, upgraded sound systems, etc.Leasing a car is generally not good for people who drive a lot and people who like to customize their cars. Pros of Buying a CarThere are also a lot of advantages when it comes to buying a car. They include:You get to build equity – the car is yours and it becomes an asset of yoursYou can customize the car how you likeThere are no mileage limitsYou can decide how, if, and when you make repairs on the carYou can sell the car on your termsIt’s generally easier to get financing when buying as opposed to leasingBuying a car is good for people who drive a lot and do not want restrictions on their driving. It’s also good for people who want or need to build equity.Cons of Buying a CarThere are also some considerable disadvantages to buying a car. They include:You generally have to put down more money up frontYou pay interest on the car’s overall cost, as opposed to leasing where you only pay interest for your length of useBuying a car can be hard if you are strapped for cash. If you have a good credit score but not a lot of money to put down, leasing a car will be easier for you than buying a car.What is The Average Cost of a Car Lease?When it comes to a car lease, there are a few costs that you will have to consider. There is unfortunately more than just the monthly payments for which you are responsible.The Down PaymentLeases usually require a down payment. The amount required will vary from dealer to dealer, but can easily be a few thousand dollars. It is based on the make, model, location, and other variables from lease to lease. The down payment is also called the “Capitalized Cost Reduction”.The Monthly PaymentThis is what most people think of when it comes to the cost of a lease. This is the fee for using the car every month. It is based on the price of the car (including the added options), the length of the car lease, and the money factor. The lease money factor is essentially the APR on the lease. Instead of being expressed as percentages, they are expressed as small decimals. You can multiply the money factor by 2400 to give you an approximate APR. (For example, if the money factor is .00275, you can multiply that by 2400 to get a percentage of 6.6%)The lower the lease money factor is, the better. Sometimes the money factors are not disclosed on the lease sheet, so be sure to ask the salesman what money factor is being applied to your loan. It’s important to have a baseline understanding of what a competitive money factor for your credit score is will help you determine whether or not you are getting a fair rate. The Acquisition FeeThe acquisition fee is essentially the dealer fee for your transaction. It commonly runs anywhere from $400-$900. This may also be referred to as a bank fee or administrative fee.The Return FeeThe return fee is charged when you – you guessed it – return your car at the end of the lease. It may also be referred to as the disposition fee. This covers the cost of cleaning and repurposing your car for sale. It’s usually a flat fee set by the dealership and can run between $300-$400.The Extra Mileage ChargesLeases always have mileage limits on them. Whether the mileage limit is 10,000 per year, 12,000 per year, or 15,000 per year, you definitely want to keep an eye on this. Do not sign a lease agreement if you know you will go over the mileage limit, as extra mileage charges can add up to a lot of extra money out of your pocket. The mileage charge rate varies drastically from lease to lease, but usually ranges between $.10 and $.25 per mile. Going just 1000 miles over your mileage limit each year for the length of your three year lease can cost you between $300 and $750. If your mileage overage is high enough, it might make more sense for you to do a lease buyout, as it may save you money.The Wear and Tear ChargesWear and tear charges will vary greatly from lease to lease. While minor wear and tear is expected, there are additional fees for whatever the dealer may consider excessive. This may include dents, dings, stains or rips to the interior, or repairs to mechanical issues. The Total Cost of a LeaseThe total cost of a lease is more than just monthly payments, so be sure to take all of these different fees into consideration when determining the total cost of a lease.How Do You Get The Best Car Lease Interest Rate Deals?It’s important to shop around when looking for a car lease. There are four main things you need to consider when trying to get the best car lease deals and the best interest rate.The sale price of the car. Even though you are not buying the car, you want to negotiate this number. Your payments will be based partially off this price, so make sure it is fair. Use a website such as Edmunds or Kelley Blue Book to find a fair market price.The residual value of the car. Also known as the resale value, this is what the car is worth at the end of your lease. You cannot negotiate it, as it is set by the lender, but you want to make sure that you pick a car that has a good resale value in the first place. Most cars have a residual value of between 50% and 58% of their sale price.The money factor. The money factor, or interest rate, is highly dependent on your credit score. To ensure that you get the best rate available, make sure your credit is in the best shape possible. Make sure you are making consistent, on time payments and are not overextending yourself with monthly payments. It’s always good to check your credit report to ensure there are no discrepancies or any issues that are bringing down your credit score unfairly. If you have good credit, you can find rates between 2% and 5%. If you have average credit, you can find rates between 6% and 9%. If you have poor credit, you can find rates between 10% and 15%.The length of the lease. How long will you have the lease? Car leases typically last 36 months, which is the length of an average warranty. Be wary of longer leases; they can rope you into paying for more repairs and maintenance. And those are the ins and outs of car leases, and how much you can expect to pay for one. Leasing can be a very good option for some, while not a good option for others. Look at your driving habits and what your expectations are with your new car. You may find that buying a car is a better option for you.If you currently have a lease but you are interested in a lease buyout, contact Auto Approve today! We can help you secure a lease buyout loan so you can keep your car for less.Don’t wait... GET A QUOTE IN 60 SECONDS

There’s a lot to consider when it comes to refinance. Car loan refinancing can be especially confusing. When can you refinance a car loan? What is the best way to refinance a car loan? What are the pros and cons?Well, if you have questions on your mind about refinancing, good news! Today, we're talking all about auto loan refinance and answering all of your most burning questions!Here’s your guide to the pros and cons of an auto loan refinance.What Are The Advantages Of Refinancing Your Car?You can save money by lowering your interest rateThe main advantage of car refinance is simple: it can save you a lot of money. There are a few reasons why you might be able to score a lower car loan APR this time around:Your credit score has improved. If your credit score has improved since you initially applied for financing, there’s a good chance you can get a much lower car loan APR. Your credit score could have improved for a number of reasons. Making consistent and full on time payments can impact your credit score positively, as can paying down outstanding debt. Your credit score is one of the biggest factors in determining what interest rate you are offered, so an increase in your score can lower your interest significantly.The market rate has decreased. If the overall interest rate in the market has decreased, there's a good chance you may qualify for a lower car loan APR. Right now car loan APRs are incredibly low (although they are set to increase as the year goes on). In the past two years the average car financing rate has decreased over 1.3%, which can add up to a lot of savings if you refinance.You got talked into a bad deal in the first place. Dealerships are notorious for adding on high markups to financing plans. Simply refinancing to an accredited lender may reduce your interest rate, even if your credit score and income have remained the same.You can reduce your monthly paymentsRefinancing your car loan gives you the chance to reduce your monthly car loan payments. This can happen either by lowering your APR (which naturally leads to lower payments) or by changing your repayment period. If you need some extra room in your monthly budget, lengthening your repayment period will allow you to spread out your payments over a longer period of time. This will reduce your monthly payments.You can add or remove a cosignerIf you need to add or remove a cosigner for your loan, you will need to refinance your car loan. It is not possible to simply add or remove a cosigner, it requires you to take out a new loan completely. This is because interest rates and loan terms are highly dependent on the applicant. So if you want to add or remove a cosigner, refinancing your car loan is the best option.What Are The Disadvantages If I Refinance My Car?Your existing loan may have prepayment penaltiesIf your existing car loan has prepayment penalties, the penalties may outweigh the savings of a refinance. Car loan paperwork should have the fees listed out. If it’s unclear, call your agent to confirm.Reducing your monthly payments may mean you pay more overallIf you are refinancing your car loan to make your car loan payments more manageable, you may end up spending more money overall. Spreading out your payments over a longer period of time will reduce them, but it also means that you will be paying interest over a longer period of time. But if you need the extra breathing room in your monthly budget, it might still be worth it.It may temporarily drop your credit scoreWhen you refinance your car loan, you are paying off one loan with another loan. So you are closing out one account and starting a new one. This will affect two areas of your credit score: your credit history length and your new credit. Your credit history length will be reduced since you are closing one account out, and your new credit will show one new account and a hard inquiry into your credit. Neither of these account for a large portion of your credit score, but you should be aware of it. Especially if you are relying on a good credit score for another reason, such as a mortgage or another loan application. How To Decide If An Auto Refinance is Right For YouIf you are wondering if an auto refinance is right for you, ask yourself the following questions:Do you qualify?First off, are you even eligible for auto refinancing? If your car is more than ten years old or has more than 100,000 miles on it, your vehicle might not even qualify for refinancing.How much time has passed since your initial financing?There is no minimum amount of time you need to wait to refinance your car loan, but experts agree that waiting 6-12 months will give you the best shot at refinancing. This will give your credit score enough time to bounce back after the hard inquiry and will give you the chance to make consistent, on time, full payments. This will show lenders that you are a good candidate and will help ensure that you get a better interest rate. How much time is left on your loan?If there’s less than a year left on your car loan, it’s probably not worth it to refinance. First off, lenders will probably not find it to be worthwhile, so you may have a hard time getting approved. Second, it won’t be as worthwhile to you. Car loans are front loaded and amortized, meaning that in the beginning of the loan you are paying more towards the interest, and towards the end of the loan you are paying more towards principal. So the closer you are to the end of your loan, the less you are paying in interest (and thus the less auto refinance will save you).There are a lot of advantages to refinancing your auto loan, but it will depend on your situation whether or not the timing is right.If refinancing sounds like a good option for you, consider refinancing your car loan with Auto Approve. We specialize in auto refinance and have relationships with lenders all across the country. This means we can save you a lot of money and we can make the refinancing process super simple. And with a 96% would recommend rating on LendingTree and an A + with the Better Business Bureau, you know you are in good hands. So don’t wait any longer to start saving money!GET A QUOTE IN 60 SECONDS

Whether you are refinancing your car for the first time or the fourth time, you may be wondering “how many times can you refinance a car loan?” Well, we’ve got good news for you! Today we are talking all about auto refinance and how many times you can refinance your car loan. Is it Okay To Refinance an Auto Loan More Than Once?Long story short: there is no limit to the amount of times that you can refinance your auto loan. But there are some questions you should ask yourself if you are thinking about refinance. Auto loan refinancing should have you asking yourself:Do I qualify for refinancing?When did I last refinance?How will refinancing affect my credit?How do I know the time is right to refinance again?Let’s go through each of these and see if refinancing your car loan more than once is a good idea.How Can I Qualify To Do Auto Loan Refinance Multiple Times? Should I Refinance Multiple times?Do you qualify for auto loan refinancing?First off, do you qualify for refinance? Qualifying for an auto loan refinance will be pretty much the same every time you apply. Here are a few things that lenders will ask:How old your car isHow many miles your car hasHow much money is left on your loanMost lenders require that your car is less than ten years old and has less than 100,000 miles on it. As your car gets older and depreciates more, refinancing will get more difficult.It will also depend on how much time and money is left on your initial loan.Auto loans are front loaded amortized loans. This means that in the beginning of your loan you are paying more in interest, and towards the end of the loan you are paying more towards the principal. For the lender, this means that they will make more money off of you the earlier you are in your loan. For you, this means that you will save more money overall the earlier you are in your loan.If your loan has less than a year left on it, you will most likely not qualify for refinancing (and it probably wouldn’t be worth it for you in the first place).When did you last refinance your car loan?While there is no exact timeline to when you should refinance again, experts recommend that you have 6-12 on time payments with your current lender before you refinance. This will show lenders that you make full, on time, consistent payments to your car loan. It will also help your credit score. When you refinance your car loan, your credit score takes a slight ding from the initial hard inquiry that is made on your credit. After a year, that inquiry will disappear. Having on time payments during this period will also help your credit score, as payment history makes up 35% of your score.Will refinancing multiple times affect your credit?Refinancing multiple times will affect your credit, and it’s important to keep that in mind. But that doesn’t mean it will affect it negatively. When you refinance, you affect two parts of your credit: your credit history length and your new credit. Remember, refinancing is paying off one loan with a new loan. By getting rid of one account, you are decreasing the age of your accounts. You are also triggering a hard inquiry in your new credit. Pro Tip: The inquiries on your credit report last less than one year, so they are only temporary. While multiple inquiries can bring your score down, one or two will not affect you by more than ten or twenty points, so don’t let that scare you off from refinancing your car loan. The new credit category of your credit score only accounts for 10% of your score.When you refinance, you are aiming to get better terms, whether it is a lower car loan APR or a more manageable repayment plan. Either way, the goal is to save you money and make your monthly payments more doable. So if refinancing will put you in a better position to make full, on time, consistent payments, it will actually help your credit score in the long run.How do you know the time is right to refinance again?You should refinance if any of the following apply to you:You can get a better interest rate. If your credit score has improved since your last auto refinance, you may be eligible for a lower car loan APR. Similarly, if the market rates have decreased there may be lower interest rates available to you. This can save you a lot of money in the long run.You need some breathing room in your monthly budget. Refinancing can save you money by lowering your interest rate, and it also allows you to change your repayment schedule. If you need a little more wiggle room in your budget every month, you can change your repayment plan so that you are spying your loan off over a longer period of time. This can free up hundreds of dollars in your monthly budget.You want to add or remove a cosigner. If you want to change who is listed on the loan, you will need to refinance your loan. You cannot simply change who is listed as the borrower.When does it not make sense to refinance again?There are times when refinancing your car loan will not make sense for you. If your car does not qualify or is underwater. If you owe more on the car than the car is worth, or the car is simply too old, you will not be able to refinance. If there are hefty prepayment penalties. If your existing loan has significant prepayment penalties, the cost of refinancing may outweigh the benefits of refinancing. It’s always important to do the math to make sure that refinancing will be financially beneficial.If there’s less than a year left on your loan. If you have less than a year left on your loan, you may not qualify for refinancing, or it might not be worth it. Do the math and decide if it’s even worth it with so few payments left.How Can You Tell If Auto Refinance Companies Are Reliable?You’ve decided that refinancing is a good move for you right now. You can save a lot of money every month, and save money overall at the end of your loan. But how do you decide which auto refinance companies are right for you?When looking for a new lender, consider a mix of traditional banks, credit unions, and online lenders. You should aim to apply with 3-5 lenders. And make sure to apply to them all within a fourteen day period – this way it will count as one hard inquiry on your credit report. The easiest, most convenient, and most cost effective way to do this is to use a company that specializes in auto refinancing, like Auto Approve. We can streamline this process for you and handle all of the tedious paperwork, so that you don’t have to. When the offers come in, we bring them right to you.Once you have your offers, consider the following:What interest rates are being offered?What are the repayment periods?Are there prepayment penalties?Are there hidden fees?Do they have good customer satisfaction ratings?It is important to consider all of these aspects of the offer. One of the most important factors however is the customer satisfaction. You want to know that your lender is communicative and transparent. You want to know how your money is allocated between interest and principal, and what fees may be taken out. Issues in communication is the number one complaint with refinancing companies according to the Consumer Financial Protection Bureau. So don’t take this lightly.We know how important communication is here at Auto Approve. That’s why we pride ourselves on our customer service. Our TrustPilot reviews speak to our commitment to a fantastic consumer experience. We also have an A+ rating with the Better Business Bureau and a 96% would-recommend rating on LendingTree. Once you have your offers and compare everything, you will have to decide which lender is right for you. Once you decide, it’s just a matter of filling out the paperwork and signing on the dotted line. And if you use Auto Approve, we can handle all of the paperwork for you. Even the DMV paperwork!And that’s it – refinancing your car loan again can be that easy!There is no limit to the amount of times you can refinance your car loan, so you should refinance your car loan as often as it makes sense to do so.If you are like most car owners, you are overpaying on your car payments every month. But one stop over at Auto Approve can change that. So get started today!GET A QUOTE IN 60 SECONDS

Credit scores always seem like a bit of a mystery. How are they calculated? Why do they seem to randomly increase or decrease?That's why, today we're talking all about FICO scores; how they are calculated, what causes them to change, and why having a good credit score is so important.And, perhaps most importantly, what we can do to increase our credit score. After all, whether you want to buy a house or refinance a car loan, your credit score matters.Let’s look at how FICO credit scores are calculated and how you can increase your score.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. How Credit Scores are CalculatedCredit 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? The truth is good credit means a whole lot these days. Again, 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?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 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 “does refinancing affect credit scores” – 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 scores.Put 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