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If 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?The difference between hard and soft credit inquiries and how they can affect your FICO® Credit ScoreFirst things first, what’s 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?FICO is essentially a brand of credit score. FICO is 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.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. You are then affecting the “New Credit” and “Length of Credit” categories on your credit score, which together account for 25% of your score. 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. Does applying to refinance trigger a hard inquiry?Applying to refinance your mortgage or vehicle 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 count as one hard inquiry. (Thinking of refinancing your auto loan? Contact Auto Approve today to see how we can help!) How do you dispute a hard credit inquiry?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 really do not 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.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.We hope this answered your questions about how credit inquiries affect your credit scores. If you're thinking about refinancing your vehicle to a lower interest rate to save money, Auto Approve can help! Contact us today to get a quote – and don’t worry, quotes count as soft inquiries!GET A QUOTE IN 60 SECONDS

We get it: budgeting can be tough. And it can be especially hard to stick to the strict budgets that we tend to set for ourselves. But the truth is creating and sticking to a budget is the best way to pay down debt, and pay it down fast.The trick to creating and effective budget is to make sure it's realistic – that way you're more likely to stick to it.Here are a few simple tips for budgeting to help you get your financial life in tip-top shape.Tips for budgeting and paying down debt fast:Determine your incomeFirst things first, you need to determine how much money you are bringing in every month. This is the first step that people often miscalculate. You cannot simply write your salary down and assume that is accurate. You need to calculate your actual take home pay, which is your pay minus any taxes. This is your net income. If you have any deductions for a 401K or similar accounts, make sure you account for them as well.Next determine if you have any other income coming in every month. Maybe you have a side hustle that brings in a few hundred a month, or perhaps you have an inheritance that you receive monthly. Whatever it may be, make sure you keep a record of it as income.Categorize and Track ExpensesThis is where you need to get very organized. A spreadsheet will be very useful for you here. You will have two categories each month, fixed costs and variable costs.Fixed costs are your monthly expenses that do not change. They are the same amount every month. Here are some of the fixed costs you might have:Rent or MortgageCar PaymentCable BillInsurance PremiumTrash CollectionInternetPhone BillProperty TaxesChildcare ExpensesStudent Loan PaymentsStreaming Services (Netflix, Hulu, Amazon, Etc)These costs may or may not be adjustable based on your situation. For example you might be able to cut down on your streaming services, but your insurance is non-negotiable.Variable expenses are expenses that change from month to month. Here are some of variable costs you might have:GroceriesElectric BillParking FeesDining OutEntertainment/ AttractionsHome Maintenance and RepairsGo through your credit card statements and bank statements to categorize everything, that way you won’t miss anything. Experts suggest going back six to eight months to see how much you’ve been spending on each category per month. This will allow you to see where you might be able to cut back. Determine an average for each of the categories that you can plug into your budget. You might be surprised how much you end up spending in certain areas.Make a PlanFinancial advisors recommend a 50/30/20 model for personal budgets. In this model, 50% of your income is allocated for needs, 30% is allocated for wants, and 20% is put into savings. Another common model is the 70/20/10 plan, where 70% of your income goes to monthly bills and everyday spending, 20% goes to savings, and 10% goes to debt repayment. There are many different budgeting models out there, so do some research and find out what will work best for your lifestyle and your financial goals.No matter what your plan is, make sure it is realistic, doable, and easy to track. The more complicated your budgeting system is, the more likely you will lose steam and your budget will go off the rails.Budget your NeedsWhen reviewing your expenses, you will need to divide all of your expenses into needs and wants. What do you need to survive? What is a luxury? Divide them up and take a look at each category. Let’s start with your needs. Electricity, rent, internet; these are things we can’t live without. But there is wiggle room when it comes to some of our needs. Groceries are a necessity, of course, but reaching for the brand name isn’t a necessity. Most people need a phone, but do you need a high data plan? Look through your bills and see if there are places you can trim back on your costs. Budget your WantsThis is where you have the most room to adjust your budget. Entertainment, clothes shopping, dining out; these are all categories that we can adjust drastically. Look at your average spending in these categories and determine where it is easiest for you to adjust. Maybe you can go out to eat once per week instead of two. Maybe you can cancel one of your streaming services. Little changes here and there will add up to big savings over time.Budget your GoalsWhat are your financial goals, both short term and long term? The more structured you can be with your budget, the more realistic your goals will be. Come up with a line item on your budget sheet for savings, and determine how much you want to put into a savings account every month. It is a good idea to reward yourself periodically for reaching your savings goals. Save $1000? Go splurge on something (within reason). This will create a positive reward system and encourage you to keep saving. Your Goal: Pay Off Credit Card Debt and Student Loan DebtGetting out of credit card debt is a primary motivator for many people who start budgets. Go through your credit cards and identify any high interest cards. Are you able to get a balance transfer credit card with a lower rate? Transferring your debt to a different card may drastically lower your payments. Use your savings to strategically pay off cards with higher rates.Look at your student loans and strategize their payments in the same way. Use your savings to pay down the principle on the higher interest loans first. It might be worth looking into consolidating your loans if you are having trouble keeping up on payments.Your Goal: Buy a HouseBuying a house is most likely the biggest purchase you will make in your lifetime. If you don’t own a home yet, don’t get in over your head. Don’t fall in love with a house that will eat up every penny of your income. It is always good to have a buffer in your expenses, and overcommitting to a mortgage payment is a very common and very dangerous error. If you already have a mortgage, look into refinancing if the market rates are good. Reducing this rate can save you thousands and drastically cut your mortgage payment every month.Your Goal: Buy a CarSaving to buy a car is another huge purchase, though not quite as daunting as buying a house. If you need a loan to get your wheels, compare rates with many different lenders before committing. Making a down payment can be helpful in ensuring your monthly payments aren’t too high. It is important to know how much you can comfortably afford to spend every month on car payments before you even start looking at cars. It is easy to get swept away when you go to a dealership, so stay committed to the number that your budget allows.If you already have a car, refinancing your car loan may help lower monthly payments. If you have a high rate, contact Auto Approve today to see if we can help you save some money!Your Goal: Get Better CreditKeeping on top of your bills and making consistent payments is the best way to start fixing a damaged credit score. Budgeting can help you prioritize paying down debt which will ultimately help your credit in the long run. It is a good idea to get your credit report at least once a year to check in on the health of your credit. Look for any inconsistencies or errors and report them to the credit agency. Working to maintain a good credit score will ultimately pay off in the long run by giving you lower interest rates and better terms for any accounts in the future.Maintain Your BudgetCreating a budget doesn’t do much good if you aren’t going to stick to it. Make sure you check in every month to track your expenses and make sure you aren’t going off the rails in any category. Top Three Tips for Budgeting:Know your baseline expenses. This is the bare minimum that you need to get by every month. It’s important to keep this number in mind in case you ever lose your job or life takes an unexpected turn.Budget for essentials first. When creating your budget, make sure your rent/mortgage, insurance, electricity, and anything else that you can’t live without are included in your budget first. Track and adjust variable spending. Keeping an honest account of your spending will help you eliminate problematic spending patterns. Adjust your spending as needed, keeping in mind that the less you spend the more you save.Those are our top tips for creating a budget and paying off debt.We hope these tips will help you create a useful budget that can guide you out of debt and into savings. If refinancing your vehicle can help with your monthly budget, give Auto Approve a call today and see if we can save you money and help you reach your financial goals faster. GET A QUOTE IN 60 SECONDS

Getting a new car is a huge decision that can be very exciting – and very overwhelming. There are a million things to decide, from the make and model, to the trim level, to the color. But perhaps the biggest decision you will have to make is whether to lease or buy your new ride.In this article, we will discuss the pros and cons of leasing and buying a new car and help you decide which is the right choice for you.Here’s everything you need to know about leasing vs. buying a car.What is Leasing?When you lease a car, you are essentially renting the car for an extended period of time. Instead of paying for the whole car, you are paying for the depreciation that will occur while you are using the vehicle, plus interest and fees. Most leases are what’s called “closed-end leases”, which means that the residual value of the car is determined and contracted before you drive it home.How are lease payments calculated?Let’s look at how lease payments are calculated as opposed to financing payments. Here are some terms we will be using:Capitalized Cost- The price of the car. This can be negotiated, even if it’s a lease.Capitalized Cost Reductions- Any discounts or deals that the dealership may apply.Residual Value- The expected value of the car at the end of the lease term.Money Factor- This is the financing charge a person pays on a lease. This number is listed as a decimal, so multiply this number by 2400 to get an equivalent APR.The cost of the lease is as follows:Capitalized Cost - Capitalized Cost Reductions - Residual Value + Interest + FeesYou will have to pay lease origination fees plus registration fees, along with a down payment and security deposit. These fees are often considered “drive-off” costs which you pay upfront.  The remaining depreciation and interest will be divided up into monthly payments. For example, say you find your dream car that has a capitalized cost of $40,000. It’s residual value is $25,000, which means that you will be paying off the $15,000 depreciation. Ultimately you will be making payments on $15,000 plus interest and fees. In general, your monthly payments will be lower when leasing as opposed to buying. How are financing payments calculated?Loan payments are calculated based on the entire cost of the car:Capitalized Cost - Capitalized Cost Reductions + Interest + FeesIf you were financing the vehicle from the example above, you would be making payments on the entire $40,000, plus interest and fees. Therefore your monthly payments (and overall out of pocket costs) are less if you choose to lease rather than buy.What are the Pros of Leasing?Now that we’ve discussed how payments are determined, let’s discuss why leasing is a popular option when getting a new car. Here are some of the top reasons people choose leasing over buying:You will have lower monthly paymentsAs we discussed above, your monthly payments will be lower when leasing as opposed to buying. You don’t have to worry about sellingNot having to worry about resale is a huge perk of leasing. When your lease is over, you simply hand your keys back to the dealership and walk away.You can get a new car every few yearsIf you love having the latest model of everything, leasing may be especially worthwhile for you. Every few years when your lease is up, you get to hand in the keys and get a new car, and whatever new technology comes along with it.Your warranty will cover repairs and maintenance (sometimes)New cars typically come with three year warranties, which is also the average length of a lease. This means that while you are driving your lease, most repairs (and sometimes oil changes) will be covered by the warranty. You can maximize tax deductionsIf you are a business owner, leasing a car has more tax advantages than buying a car. The IRS allows you to write off both the depreciation costs and the financing costs that are part of the monthly payments. This is more than you can write off when you purchase a car.What are the Cons of Leasing?You don’t build equityThe main downside of leasing is that you do not build equity. At the end of the day, you do not own your car, so it will never count as an asset for you. There are early termination feesIf you are unhappy with your lease for any reason, there will be fees to terminate the lease. Breaking the lease early may also have negative effects on your credit score.There are always mileage limitsWhen you lease a car, there are always mileage restrictions on your vehicle. Dealerships usually have annual mileage caps of 12,000-15,000 miles per year. If you go over your allotted mileage, you can pay between 15 and 40 cents per mile. This can add up to be a very hefty sum if you drive a lot. Cost of wear and tearWhen you return the car, it must be in great shape. Normal wear and tear is acceptable, but beyond that you will be charged a fee for anything they consider excessive. This can include dings, dents, and tears to the interior.You can’t customize your carSince it’s not really your car, you can’t customize it as you may like. You are expected to give the car back as you received it, even if you think the upgraded wheels or spoiler add to it’s value.There are often restrictions on useMany leases have use restrictions built into their contracts. In addition to the mileage limits, you may be restricted against driving the car out of the country, or they may say that you are unable to use the car for rideshares (like Uber or Lyft). They might even state that you are unable to use the car for business. If you want to use your car for anything other than commuting and routine driving, leasing might not be a great option.So Should I Buy Instead? What are the Pros of Buying?You own the carAt the end of financing, the car belongs to you completely. It is an asset that helps build your equity. There are no limitationsSince you own the car, you do not have to worry about mileage limits or wear and tear. No one can tell you where to drive the car, or how to use the car. And you can customize it however you would like. Even if you are financing the car and don’t own it outright just yet, loans typically do not have the restrictions that leases have.Financing is often easier than leasingIn general, it is easier to get a loan than it is to get a lease. The credit requirements are usually lower and people are more familiar with the process of getting a loan rather than getting a lease.You can sell it whenever you want toUnlike a lease, you can sell your car whenever you want to sell it. While it is almost always a good idea to wait until the loan is paid off, once it is paid off you have an asset that you can sell whenever you want.You decide when – and how – to fix thingsWhen something goes wrong on a leased car, you will need to either go to the dealership or to a certified mechanic to get it fixed. But when you own the car, you can handle it however you’d like, and whenever you’d like. If you want to use factory parts to fix it, you certainly can. But you can also opt for cheaper parts and cheaper labor if you choose.What are the cons of buying?You pay interest on the entire cost of the carWhen you lease, you are only paying interest on the capitalized amount minus the residual amount (the depreciated amount) as opposed to paying interest on the entire cost of the car.You may need to make a down paymentTo get the best rates, you will usually have to pay a down payment. Doing so will lower your loan to value ratio (LTV) and get you a better APR. This means that your upfront cost as well as your total cost will be much more than when you lease.The warranty will endWhen you buy a new car, you will have a warranty for the first few years. But after that, you are on your own for any repairs and maintenance. Those are the major differences between leasing and buying a car. There are pros and cons when it comes to leasing and buying cars, and you will need to decide what works best for your situation. If you use your car sparingly and prefer to have a nice, new car every few years, leasing is perfect for you. But if you drive a lot and love to customize your car, leasing is probably not a great option for you. Already in the middle of a financing arrangement? We may be able to get you a better rate! Contact Auto Approve to see how we can save you money today.GET A QUOTE IN 60 SECONDS

Financing options can be tricky when you are looking to buy a car. Oftentimes, dealerships will offer you great deals, but only if you agree to their less-than-stellar financing. Or maybe you were cajoled into bad terms because your credit at the time wasn’t great, and you didn’t have another option. If you have found yourself in this situation, now might be the time to refinance.If you don't have a great car loan interest rate, now might be a great time to refinance your car loan. Reasons for Bad Financing TermsThere are many reasons you might not have a great interest rate on your new or used vehicle. Let’s review some of the reasons below.Dealership FinancingA very common reason for bad financing terms is dealership financing. If you bought your car through a dealership, they almost certainly tried to convince you that dealer financing was a good choice. And why wouldn’t they? Dealerships are indirect lenders, which means they usually act as an inbetween for you and a bank or credit union. The financial institution handles the actual financing, while the dealership tacks on financing fees. They make money by coordinating and convincing you to participate in their financing. This is money coming directly out of your pocket. If this happened to you, you should be able to refinance and get out of the agreement you are currently in. Now might be the best time to refinance your car. Many who have refinanced out of dealership loans save as much as $80 a month.Bad CreditIf you had so-so credit during your initial purchase and financing, you may have been subjected to a bad interest rate. When determining interest rates, lenders look at the 4 c’s of credit: Capacity- your ability to repay the loanCollateral- what you have that can repay the loanCapital- how much you are worthCredit- your credit score and payment historyYour credit score is affected by a combination of payment history, amounts owed, credit history length, credit mix, and new credit. If there have been changes to any of these categories, you may be eligible for a better rate. Check your credit score and see if it has improved since your initial loan.Market FactorsDid you need to buy a car when the interest rates in the US were high across the board? As much as we try to prepare, we cannot control the external factors that affect our finances. If the interest rates were high when you originally purchased your car, now might be the best time to refinance your car. Does refinancing a car hurt you?There are a few ways that refinancing can hurt your credit or hurt your pocketbook. It is always a good idea to do the math and see how much refinancing will cost vs. how much it will save you. Here are some reasons that you should hold off on refinancing. Prepayment PenaltiesLook at your current loan and determine if there are prepayment penalties. Prepayment penalties are put in place by lenders to discourage paying the loans off early, as early payment results in less accrued interest, which results in the lenders making less money. The penalties will be listed in your loan agreement, but you can also call the lender to clarify.Time RemainingIt is important to hit a sweet spot in the timing of your car refinance. Experts suggest waiting six months to a year before refinancing, as it will take this amount of time for your credit score to rebound. But you also want to make sure that you refinance when there is at least two years left on your existing loan. Because auto loans are front-loaded interest bearing loans, you pay more interest the earlier it is in the loan. If you wait until there is only a year left on your loan, you won't be saving a lot in interest payments, as most of your money will go to the principle payments. Your Car Isn’t in Great ConditionIf your car has a lot of miles on it, or is worth less than what you owe on it, you probably won’t have luck refinancing right now. Why Now Might Be the Right Time to RefinanceMany experts agree that right now might be the best time for many people to refinance their car loans. Here are some of the top reasons you should consider refinancing your car now.It’s Time to SaveAccording to a SpendMeNot survey, 69% of adults have less than $1000 in savings. Moreover, a recent Credit Karma survey showed that most Americans don’t have even $400 in savings for an emergency. Small savings here and there can help many to start building their emergency funds.The Rates are GreatThe automotive website Edmunds is reporting the lowest interest rates in recent years, with some financial institutions offering rates of 2 to 3%. A Credit Karma study revealed that people who refinanced through them saved an average of $3,000, which meant people were saving about $55 per month. With the unpredictability of today’s economy, you should think about refinancing before the interest rates increase. It’s Easier Than You ThinkCar refinance sounds like a big undertaking. It seems to be a complicated, mysterious process with a lot of options to weigh. But it is actually much easier than you may think. Refinancing a car is much simpler than refinancing a mortgage, and can usually be done in a few hours. And if you use Auto Approve, we make this process seamlessly easy. All you need to do is fill out some basic information and we will shop around and get the best quotes for you to compare. We even handle the DMV!With a 4.7 out of 5 rating on Trustpilot, our clients can testify to the ease and effectiveness of refinancing. One client noted “I was worried about refinancing because I have never been through the process. It was so seamless and I got a great outcome out of it all.” Some users report cutting their interest rates by as much as 6 points. At Auto Approve, we aim to make this process easy and save you money. Those are our two main goals, and our clients testimonials show that we get results. With today’s low interest rates and Auto Approve’s easy application process, right now might be the best time for you to refinance your auto loan.So what are you waiting for? Contact Auto Approve today to get started!GET A QUOTE IN 60 SECONDS

Federal unemployment benefits ended for many states in the first week of September. This comes as a result of increased vaccinations, the reopening of most businesses, and an improving job market. While this may be good news for some, for others it means that the extra $300 a week that they were relying on to make ends meet is now gone. In this article we look at the unique economic position COVID put us in and give you some tips on how to manage the end of unemployment benefits.Here are some tips and tools to handle the end of unemployment benefits and help you balance your budget.How Spending Changed During the PandemicAccording to an Experian survey, 66% of consumers reported spending the same or less than they did in pre-pandemic 2019. The biggest reductions were reported in the following areas:30% said their biggest budget change was a reduction on eating out and entertainment23% said their biggest budget change was a reduction on nonessential purchases16% said their biggest budget change was a reduction on travel expensesYet despite this, a deeper look at these categories reveals that the reduction in savings wasn’t as drastic as some may think. The sharp uptick in online shopping replaced runs to the store, ordering on GrubHub or DoorDash replaced eating out, and increased entertainment subscriptions like Netflix and Hulu replaced entertainment purchases. A CNBC survey found, notably, that there was an increase in pet ownership and spending. There was a 23% increase in spending on pets during the pandemic, which is not surprising given that so many people were now stuck at home (and hey, what’s better company than a furry friend?)  So while spending may have been reduced slightly, it ultimately shifted to other areas.The most significant cuts to spending that were not easily replaced with other spending habits were travel and gym memberships.How Saving Changed During the PandemicTheoretically speaking, any saved income could be allocated to a savings account. A Credit Karma study revealed that only 28% of those surveyed said they were actually saving during the pandemic. When this was further broken down by employment status, it is unsurprising that those who were able to save were primarily those who maintained steady work throughout the pandemic.32% of people with full time jobs reported saving more than in 201934% of people with part time jobs reported saving more than in 20198% of unemployed people reported saving more than in 2019People who were able to transition easily to working from home were able to maintain their normal income while reducing their spending, even if only slightly. Those savings were reported to vary in intention from building an emergency fund, to making an investment such as a mortgage or a down payment, to paying down debts. But ultimately savings have been cut drastically during the pandemic. Credit Karma surveyed those who reported not saving at all during the pandemic. When asked why, they cited the following:21% said they had become unemployed as a result of the pandemic38% said they had lost hours or wages because of the pandemic32% said it was because of increased expenses during the pandemicBut why did expenses increase for some, while not for others? Research has shown that middle and lower income families saw increased expenses with the pandemic for the following reasons:The inability to shop around for the best prices on groceries and other necessities.Delivery minimums from stores made it difficult to split orders to multiple stores, again hindering the ability to shop around for deals.Increased energy and water bills.Costs associated with homeschooling and working from home (laptops, internet, etc).All of this adds up to a situation where people were making less money and in many cases spending more money. That was when the federal unemployment came in to bail out working families.How Unemployment Assistance HelpedThe people who were struggling the most during this time were the service industry professionals, gig workers, and retail employees that were forced out of work. For these people, the Pandemic Emergency Unemployment Compensation (PEUC) was passed at a federal level to provide assistance. This was put in place as an extension of states’ unemployment compensation, which expired 8-10 months after the original unemployment began. This extra $300 a week became a necessary addition to so many people’s budgets. With the reopening of the economy and increased vaccination rates, many businesses are now hiring and the unemployment benefits are coming to an end. The additional unemployment assistance ended for most people in early September. For many, this will be another difficult transition. Jobs are not filled immediately and there are often gap weeks between unemployment payments and paychecks from their new employer. Let’s look at some tips for preparing for another period of economic uncertainty.How to Manage Without Further Unemployment AssistanceMake a BudgetThis seems simple, but it is the most important thing you can do for your finances. Simply start a spreadsheet and start doing the math:Make a column outlining each and every expense you have. From your electric bill to your HBO subscription to your car loan payment. Record everything.Make a column outlining every source of income you have. Your income, your partner’s income, and any side hustle you have going on.Add ‘em up! Save If You CanIf your income is higher than your expenses, take the remaining amount of money in your budget and divide it further. Can you afford the fancy coffee two times a week? Great! Give yourself an allocation of “just for me money” where you can buy the non essentials. Try to add a saving item to your budget if you have the extra money. You should aim ultimately for 10-15% of your income to go to savings, whether it is a 401K or an emergency fund (everyone should have an emergency fund for when the unexpected happens).Cut Expenses If You Need ToIf your income is lower than your expenses, you have to make some tough choices. What can you trim out that you don’t need? The easiest things to get rid of are subscriptions. Ditch Netflix and Apple TV and save $20 a month (you can beg for a friend’s password, no?). Check your bank accounts for any subscriptions that may be on auto-renew that you may have forgotten about. See if there is a cheaper plan for your cell phone or cable. Try to trim the fat anywhere you can. If you have a car loan, look at your terms and see if car refinancing is a good move for you. Interest rates are low right now to encourage spending, and if your credit is in good standing you might be able to save a good deal of money each month by refinancing to a lower interest rate. Look for a Side HustleWith so many companies transitioning to work from home, there are many part time side gigs that you might be able to get in this economy. There are loads of customer service and data entry positions that are work from home and only require 10-15 hours per week. This extra bit of cash could make all the difference for your budget.Other Savings TipsThere are several small scale changes you can make that can add up to big changes over time. Check community bulletin boards for free local events. This can cut your entertainment budget a great deal.Prepare a thorough grocery list. Plan out your meals for the week and resist impulse buys while shopping. And while you are at it, buy the generic versions of things. You’ll save a lot and you might not even notice the difference.Bundle your cable and internet. You can save close to $50 a month by doing so. Make your own gifts. Pinterest is your friend! Keep an eye on your electric bill. Small changes to your habits can add up to big savings.Unsubscribe from marketing emails. If the temptation to shop online isn’t there, it’s easier to cut back.Cut back on the fancy coffee. It’s hard, we know. But $5 a day, 5 times a week on fancy coffee adds up to $100 a month. If it’s not in your budget, cut it out.Budgets can be hard and they can be boring. But budgeting is the best way to keep an eye on your finances and make sure you are not getting in over our head. The loss of the added unemployment funds will be difficult for many, but we hope that some of the tips outlined here can help you save some money here and there.If you are looking for some extra money every month, it is worth looking into refinancing your auto loan. With the low interest rates being offered today, there is a good chance you can save a significant amount of money. At Auto Approve, we are passionate about saving people money. Let us save you money today!GET A QUOTE IN 60 SECONDS

Refinancing can be useful for many reasons, but the intent is always the same: save some money, either in the short term or in the long term (or both, right?) Whether you’re looking to save some cash in the long run, or just loosen up your day to day budget, car refinancing might be the right move for you. Here we discuss the top three reasons you should consider refinancing today.Reason #1: You Can Get a Lower Interest RateThere are a number of reasons why you might be able to secure a lower interest rate. And if this is the case, it is absolutely worth looking into vehicle refinancing. A lower interest rate can reduce how much you will end up paying in total on your car, as well as reduce your monthly payments. And who couldn’t use some extra cash every month? Let’s look at some reasons you might be able to secure a lower interest rate.Your Credit Has ImprovedYour credit score is the biggest factor in determining an interest rate. Credit scores help lenders to gauge how likely you are to repay the loan they are giving you. Let’s look at how credit scores are calculated, and how changes in your finances affect your credit score.35% Credit History (On time, consistent payments)30% Credit Utilization Score (Your total debts divided by the total credit available to you)15% Credit History Length (The age of your accounts)10% Credit Mix (How diverse is your credit portfolio)10% New Credit (New accounts and credit inquiries)A change in any of these areas can result in a change in your credit score. Say it has been two years since you took out your original loan. Since then, you have made every single payment, not only for your auto loan but for your mortgage and credit cards. You made a budget and stuck to it, and it paid off. This can offer a major boost to your credit since credit history accounts for 35% of your score. Maybe in those two years you also paid down your credit card debt significantly and reduced your credit utilization score from 50% to 25%. This shows financial maturity and makes you a very desirable loan candidate. An improvement to your credit score can translate to saving hundreds if not thousands of dollars. So what is a good credit score to refinance? A good credit score is considered to be 670 and above. As long as your score is better now than it was when you originally took out your loan, it is worth looking into.Check your credit score (it’s free to do once a year from each of the three agencies, which means you can check for free three times each year). If you have noticed an increased score, contact Auto Approve and let’s get the ball rolling on refinancing. *Pro Tip: When you get your credit report, check for any inconsistencies. Be thorough when you are reviewing, and report any issues to the credit agency. Catching any mistakes can have huge effects on your credit score!Interest Rates Are DownThe economy dictates how interest rates are calculated. Interest rates are set at the federal level by the Federal Open Market Committee (FOMC). If the economy needs a boost, the Committee will lower interest rates to encourage spending. In these unpredictable COVID times, interest rates have been lowered to encourage people to buy.Your Original Loan Had Unfavorable TermsIt’s happened to a lot of us; we go in to take a look at something and before we know it we are signing on the dotted line. Maybe you just wanted to see how that new SUV looked in person, or you were just hoping to take a quick test drive and get a feel for how that new truck drives. If this is how you got roped into your original car loan, refinancing might be an excellent idea. Dealerships have famously high interest rates and notoriously smooth salesmen. It is easy to get talked into a loan without shopping around and comparing rates. If this has happened to you, there is a good chance you are overpaying on your car loan. Vehicle refinancing can help you pay off your unfavorable loan and start over with a better, more reasonable loan. At Auto Approve we don’t have any smooth-talking salespeople (don’t tell our team we said that though). We are just really passionate about saving you money.Reason #2: You Want to Change Your Monthly PaymentsVehicle refinancing is a great way to change your monthly payments. If things have been especially tight lately, there are two ways that you can get some much needed breathing room.Refinance to a Lower Interest RateIf your credit score has improved, interest rates have gone down industry-wide, or your original loan had a high rate, there is a good chance you can refinance to a lower interest rate. This will ultimately reduce your monthly payments if you keep a similar payment schedule.Lengthen Your Payment PeriodA great way to reduce your monthly payments is to lengthen your payment period. When you refinance, you may have the option to pick 24, 26, or 48 month repayment periods. The longer your payment period is, the more spread out the total cost of the loan will be, which means your monthly payments will ultimately be less. If your interest rate isn’t much lower you may end up paying a bit more in the long run interest rates, so you will need to decide if the extra breathing room is worth the possible long term cost. Shorten Your Payment PeriodIf your financial situation has loosened up since you took out your original loan, shortening your payment period might be a good move to save some money in the long run. The shorter your payment periods are, the less time you will be paying interest on the loan. This can add up to saving big bucks when your loan is over. Your monthly payments are likely to be a bit higher, but if you are in a comfortable position it might be a good move to pay your loan off more quickly. And if you are able to secure a lower interest rate at the same time, that’s even more money in your pocket.*Pro Tip: Doing your research and running the numbers is the most important thing you can do when considering refinancing. Make a spreadsheet and use an amortization sheet to help you determine your various payments based on different payment periods. This will let you see how much you will be saving (and then decide if it’s worth it).Reason #3: You Want to Add or Remove a CosignerIf you want to add or remove a cosigner to your auto loan, you will need to refinance your car.Adding a CosignerIf you are having trouble each month making your loan payments, adding a cosigner might be beneficial to you. If they have a good credit score and payment history, they will likely qualify for a better interest rate. In order to add a cosigner, you must go through the vehicle refinancing process. When you refinance with a cosigner, lenders take the following considerations into account:Your cosigner’s credit scoreYour cosigner’s payment historyYour cosigner’s incomeYour cosigner’s backgroundYour cosigner’s consent to be financially liablePro Tip: It can be difficult to ask someone to cosign on a loan as it is a huge liability. The key to successfully cosigning is to communicate openly and honestly with your cosigner. Check in with them regularly to assure them that you are making consistent, prompt, and full payments. Give them access to any necessary documents and keep them in the loop.Removing a CosignerSimilarly, if you are no longer interested in having someone else’s name on your loan, you will need to refinance to get them removed from the loan. Make absolutely sure that you are comfortable taking on the responsibility by yourself before you remove your cosigner. Consider the following:Has your credit score improved enough to support this and give you a good interest rate?Is your cash flow good enough to support consistent, full, and on-time payments?Does your current loan have prepayment fees? Are these fees high enough to negate any benefits of refinancing?How much time left is in your current loan? If there are less than two years left on the loan, it might not be beneficial to refinance, and it might make more sense to leave the loan as is until it is paid off. On the other hand, if your loan is less than a year old it might be worthwhile to wait a bit. Waiting a year after your original lease to refinance will help your credit score to bounce back after taking out the initial loan.Those are the top three reasons that you should think about refinancing today.Have we convinced you that car refinancing might be a fantastic and worthwhile idea? Great! Wondering how to refinance a car loan? Get started with a free quote from Auto Approve today–it only takes a few minutes, so you have nothing to lose!GET A QUOTE IN 60 SECONDS

You’ve done your research and you’ve decided that it’s definitely time for you to refinance your vehicle. Maybe your expenses every month are becoming a bit too high, or your credit has significantly improved in the past year or two. Either way you’re sold; auto refinance is for you. So how do you make sure you can get the best car refinance rate?Like so much with refinancing, the more you know the better off you will be. Some diligent research and proactive measures can help you secure the best refinance rates around.In this article we will discuss the difference between interest rates and APR, what lenders are looking at when determining rates, and what you can do to get the best car refinance rate possible. APR vs Interest RatesIf you’ve been looking around at car refinancing, you have probably come across the terms APR and interest rate. But what is the difference between APR and interest rate?Interest rate is the cost you pay each year to borrow money, expressed as a percentage. The APR, which stands for Annual Percentage Rate, is the interest rate plus any other fees associated with the loan. This includes any loan fees or interest that accumulates before your first payment.Your APR is actually a much better gauge of what a loan will cost, as opposed to an interest rate. All lenders are required by the federal Truth in Lending Act (TILA) to disclose what the APR. This is the number that you want to compare when looking for the best refinancing rates.What Do Lenders Look at When Determining Your RatesInterest rates, which combined with additional fees make up the APRs, are determined by both market factors and personal finance factors. Market FactorsRefinance rates depend in part on how the economy is performing. Interest rates are set by the Federal Open Market Committee (FOMC). Lowering interest rates is intended to encourage spending if they decide that spending needs to be encouraged. After an unprecedented 2020-2021 economic season, interest rates are currently at historic lows. This is not expected to last for too long however, and many economists think that as the months go on the interest rates may start to steadily increase. Personal Finance Factors and The Four C’s of CreditWhen you apply for credit, lenders will look at what is called the four c’s of credit. These are the considerations they will take when deciding to approve or reject your loan. They will also help dictate what your APR should be. The four c’s of credit are capacity, character, collateral, and capital. Let’s explore these terms.Capacity. This refers to your ability to repay the loan. What is your income? Is it a steady job that you have had for awhile? What are your other debts? These all contribute to your capacity to repay the loanCollateral. This refers to what you have that could repay the loan. In the case of a secured auto loan, your car would serve as collateral.Capital. This refers to how much you are worth (monetarily speaking, don’t take this to heart too much). What are your other assets? Do you have a mortgage, a savings account, or another car? All of this gives a snapshot to lenders and proves that you can manage your finances and have funds, in addition to your income, to pay you debt.Credit. This refers specifically to your credit score and history. We will look at how your credit score is determined in the next section. Your Credit Score and HistoryYour credit score is the most important factor in your refinance rate. While there is no magic credit score to refinance, the higher your score is, the better rate you will secure. To ensure you can secure the best rate possible, look at the following factors:Payment History. Do you have a history of on time payments? Have you missed payments in the past? Lenders want to be sure you will pay back your debt on time. Amounts Owed. How much money do you owe? The amount of money you owe, your debts, are used to calculate your credit utilization score. A credit utilization score below 30% is considered desirable for lenders. Credit History Length. How old are your accounts? Having older accounts and a longer credit history is more favorable to lenders. Credit Mix. Do you have a mix of different types of accounts and debts? A good mix might include a mortgage, auto loan, student loan, and credit cards. This indicates to lenders that you can manage your money across multiple accounts. New Credit. Do you have a lot of hard inquiries on your credit? Do you have some brand new debts? These might be considered liabilities by lenders.What Can You Do to Secure the Best Refinancing Rates?Get Your Credit Report and Review for ErrorsContact one, or all three, of the credit bureaus (Equifax, Experian, and TransUnion) and get your free credit report. You can get your report from each agency for free once per year. Review your report thoroughly and look at the following:The date you opened any credit accounts or took out any loans. Make sure all dates are accurate.The current balance on each account. Have your records handy to cross reference.Your payment history. Be sure that you have not been reported inaccurately for a late or missed payment.The credit limits and total loan amounts.Any bankruptcies or tax liens.Your identifying information. This includes your name, address, and Social Security number. If you notice any inconsistencies with your report, you can contest the information and report it. Bureaus have 30 days to respond, so it may take some time to get a correct and accurate report. It is important to follow through however as the impact can be drastic.Keep Your Credit Balances Below 30%This is a simple way to lower your credit utilization ratio, which makes up 30% of your credit score. The highest credit scores often use less than 7% of their available credit. This will quickly improve your credit score and as soon as it is reported for the month, you will see the increase on your credit score.Request Higher Credit LimitsContact your credit cards and see if you are eligible for higher limits. This will also help lower your credit utilization ratio, ultimately increasing your credit score. This will help your score very quickly, as soon as it is reported to the credit agencies.Keep Using Consumer CreditWhen trying to increase your credit score, it may be tempting to stop using credit cards altogether to avoid accumulating more debt. It is better for your score to keep using your credit cards to make small purchases that you can pay off. If you can consistently pay off your monthly balances, it will improve your credit and make you a more desirable loan candidate.Make Your Payments On TimeKeep making on time payments to keep your credit score in good standing. Missed payments can quickly ding your score.Become an Authorized User on Another Person’s AccountThis is a quick and easy way to increase your credit score, especially if you do not have a long credit history. If a relative or good friend has an account that is in good standing and has a high credit limit, adding yourself as an authorized user will increase your credit. You don’t even need to use their credit card, you simply benefit from their good credit.Use a Secured CardA secured card is a type of credit card that is backed by cash deposits. This is especially helpful for people who do not have a long credit history but need to establish one. It is used like a normal credit card, and if you consistently make on time payments it will improve your credit score.Shop Around and CompareDoing your homework is incredibly important when it comes to securing the best refinancing rates. This is where Auto Approve can swoop in and help you compare. The best refinance loans will have competitive APRs and low minimum loan amounts. Looking for a lender with a history of high customer satisfaction rating that is transparent and reliable is also important. The most important thing you can do to secure a good auto refinance rate is to get and maintain good credit, and then shop around and compare for the best rates.Once you have a healthy credit score, Auto Approve can help you with the next steps of shopping around, applying, and comparing the rates and terms. We are currently finding rates as low as 2.25%, and we would love nothing more than to pass these savings right on to you! And don’t worry, we never tack on additional fees to your rates. Contact us today to see how we can help you refinance your vehicle!GET A QUOTE IN 60 SECONDS

Refinancing a car loan is when you replace one car loan with another loan. The terms of your loan can change, since you are essentially starting over. This can often mean adding or removing a cosigner from your policy. If your situation has changed and you need a little help with monthly payments, or you could benefit from your friend’s excellent credit, refinancing with a cosigner might be a good idea. On the other hand, if you are looking to release your friend from that huge favor they did a few years ago when they cosigned for you, refinancing your vehicle might be a good way to remove them from the loan.Here we will go over how to keep, remove, and add a cosigner to your car loan when you refinance.What is a Cosigner?So what exactly is a cosigner? A cosigner is a person who can sign onto a loan and be obligated to pay back the loan should the borrower have difficulties making on-time payments. They assume the same financial risk as the borrower. Having a cosigner with good credit can be beneficial in securing a lower APR and getting better auto loan deals.How to Keep or Add a CosignerYou originally cosigned with a good friend because you needed help with the payments (and needed an extra boost from their credit score). Rates are low now and you could use the lower car loan payments every month, so you decide you want to refinance your loan. Things are going well, and your credit hasn’t improved quite enough for you to commit to the loan entirely. Because of this, you would like to keep them on as a cosigner. Or maybe you originally took out your loan and it is way too much to keep up on every month. You are drowning in monthly payments, and you know refinancing will lower your monthly car loan payments and alleviate this. But your credit has taken a hit recently, and you know you aren’t getting the best rates as a result. Adding a cosigner can help you secure a better rate and more favorable terms. With either of these situations, you need to know how to refinance a car with a cosigner. The good news is you can easily keep or add a cosigner when you refinance. Your cosigner will simply have to meet the lender’s requirements. Here are the most common requirements to be added as a cosigner:A Good (or Excellent) Credit ScoreGreat credit is the first requirement of cosigning a loan. Think of your cosigner as a safety net; should something happen to you financially, the lender is assured that there is a backup plan for payments being made on-time. A good credit score is an indication of how strong of a security net you have.Credit scores are based on payment history, amounts owed (known as credit utilization), credit history length, credit mix, and new credit. A cosigner is only beneficial if they have good credit. A score of 670 and above is considered good, but the higher their credit score is the more helpful it will be to you.A Good Payment HistoryDoes your cosigner have a good history of on-time payments? Payment histories show lenders how people handle their debts. If you have a history of consistent payments, you are less of a risk to lenders. A Qualifying IncomeDoes your cosigner have a steady income? Their income needs to show that they can pay back the loan on your behalf if you are unable. Desire to CosignDo they want to help you out in this way? Becoming a cosigner comes with a lot of liability. Once they sign on the dotted line, they are responsible for the debt if you should default. A Clean Background CheckLenders will often use background checks to determine the liability of a cosigner. They will specifically look for financial issues, including evictions, repossessions, and financial fraud.How to Remove a CosignerNow let’s look at how to remove a cosigner from a car loan. Has your credit improved significantly since your original loan, and you no longer need the help of another person? Maybe you want to reduce the risk for a loved one who was helping you out in a time of need. Whatever the reason, you are ready to remove them as cosigner.There are three ways to remove a cosigner from your loan, but refinancing is certainly the most popular.Try to Remove them From Your Existing PolicyRead your contract carefully and closely and see if there are any provisions that will allow the cosigner to be released from responsibility. This is very unlikely, as cosigning is put in place specifically to make it difficult for one person to back out. But it is worthwhile to look through your contract if you are thinking about it.Pay Off the LoanIf you pay off the loan entirely, you will remove the cosigner automatically. This may not be a practical solution however if you are not in the position to do so. Refinance and Remove the CosignerThis is the most popular and easiest way to remove a cosigner. Since refinancing is replacing one loan with another, you are essentially paying off the original loan and starting over. Before you decide to do this, check on the following:Your Credit Score. Is your score in good or excellent standing? If it is still not in good standing, expect to pay higher interest rates if you drop your cosigner.Your Cash Flow. Are you able to make the monthly payments every month? Do not remove your cosigner if things will still be very tight. Falling behind on payments will be detrimental to your credit and can result in you losing your car.Your Current Loan. Are there prepayment penalties if you pay off your loan?  If the penalties are high, it will negate any savings from refinancing. Is there enough time remaining on your loan to make refinancing worth it? If you are near the end of your loan term it is likely not worthwhile to refinance.Your Car’s Condition. Is your car retaining value and eligible to be refinanced? If you owe more on your car than it is worth, you will most likely not be eligible to refinance.And that’s everything you need to know about adding, keeping, and removing a cosigner from an auto loan. If any of the above situations were relatable to you, it might be a good time to consider vehicle refinancing. At Auto Approve we can help you compare quotes from multiple lenders and help you refinance today. With an A+ rating from the Better Business Bureau, you know you’re in good hands with our team.GET A QUOTE IN 60 SECONDS

Are you thinking about refinancing your auto loan, but unsure of what will happen to your credit score? Does refinancing hurt your credit? While credit scores can seem confusing and complicated, it is important to predict how certain financial moves will affect your credit history. Here we will discuss how credit scores are calculated and go over the impact of refinancing. Auto Refinancing will cause a slight dip in your credit score, but it can still be worthwhile and might actually help your credit in the long run.What is Auto Refinancing?Auto refinancing is when you pay off your existing car loan with a new car loan. Your new loan will ideally have more favorable terms that will ultimately save you money (and who doesn’t want that?). To understand how vehicle refinancing will affect your credit, we will need to look at how credit scores are calculated.How are Credit Scores Calculated?Credit scores are used to help lenders assess how likely you are to pay back your debts. Credit agencies typically look at five factors to determine your credit score:Payment History. This is the most important factor in calculating your credit score, accounting for 35% of your FICO score. Do you have a history of on time payments? Lenders want to be sure you will pay back your debt on time.Amounts Owed. The amount of money you owe, your debts, are used to calculate your credit utilization score. This is the second most important factor in your credit score. This is calculated by dividing your total debt by your total credit limit. For example:Let's say, between all of your outstanding accounts, you currently owe $5,000. Your combined credit limit for all of these accounts is $50,000. 5,000/ 50,000 = .1 = 10% Credit UtilizationA credit utilization score below 30% is considered desirable for lenders. This score accounts for 30% of your FICO score.Credit History Length. The age of your credit accounts make up 15% of your FICO score. They look at the age of your oldest account, the age of your newest account, and the average age of all accounts. Having older accounts and a longer credit history is more favorable to lenders.Credit Mix. Having a diverse assortment of accounts is beneficial to a high credit score. A healthy mix might include a mortgage, auto loan, student loan, and credit cards. This indicates to lenders that you can manage your money across multiple accounts. A healthy credit mix accounts for 10% of your credit score.New Credit. The number of new accounts you have opened plus the amount of hard inquiries you have had on your credit account for 10% of your credit score. People often ask, “how long do hard inquiries stay on your credit?”. The answer is about one year. If you have had a significant amount of inquiries in this time period, it might be a red flag for lenders.What is Considered a Good Credit Score?Using the above factors, credit bureaus calculate a credit score for every person with a credit history. Credit scores typically range from 350 to 850. 800 to 850: Excellent credit740 to 799: Very good credit670 to 739: Good credit580 to 669: Fair credit300 to 579: Poor creditPeople with the highest credit scores will more easily be approved for loans and credit applications, and will typically get the best interest rates and APRs.How Will Vehicle Refinancing Affect Your Credit ScoreRefinancing will affect two of the categories used to calculate your credit score: credit history length and new credit. Having a new account will negatively affect your credit history length, and the hard inquiries and new account will also affect the new credit category. BUT it is important to note that hard inquiries only last a year on your credit score, so that will only be a temporary ding. Credit bureaus know that people contact multiple lenders when looking to open an account, so they allow a two week timeframe where all inquiries will count as one hard inquiry. In other words, don’t let fear of lowering your credit score hold you back from shopping around for the best rates.How to Prepare and Reduce Impact on Your Credit ScoreTo reduce the impact that vehicle refinancing will have on your credit, be sure to do your research and understand how credit scores are calculated. Complete all of your applications in a short period of time (under two weeks) so that all hard inquiries will count as one inquiry in the allotted window. Is Refinancing Worth It?This depends entirely on your situation, but it is often worthwhile to take a temporary hit on your credit score to improve your overall financial health. If you refinance and take a ding on your credit, the hard inquiry will only remain on your score for one year. The age of your accounts will also lengthen over time, so your credit history length will not be affected permanently. If refinancing makes it easier for you to keep up on your monthly payments, it may help your credit score in the long run. Should any of the following apply to you, it might be worth looking into refinancing:Interest Rates are Going DownIf interest rates are trending downwards, it might be beneficial to refinance your car loan. Your overall savings will negate the temporary hit on your credit.Your Credit Score has IncreasedIf your credit score has increased, you have a better chance of qualifying for a lower interest rate. Check your credit score at one or all of the three major credit agencies (Equifax, Experian, and TransUnion) and see how your current credit score compares to your score when you originally took out your auto loan.You Need Extra Cash Every MonthIf money is tight, refinancing might alleviate your monthly payments. If you are in danger of making late payments or defaulting on your loan, this will severely damage your credit score. It is far better to refinance and take a small hit than risk defaulting.You Need to Add or Remove Someone as a Co-BorrowerIf you need to either remove or add a co-borrower to your loan, refinancing will allow you to do so.Your Car is Retaining ValueIt is important that your car is retaining its value if you want to refinance. Owing more than the car is worth is called being “upside-down” in your loan. You will have a hard time finding a lender if this is your situation.Whether or not it is worth it to refinance your car loan will depend on your situation, but the benefits of refinancing will often outweigh the dip that you might see on your credit score. If you are wondering how to get approved for auto refinance, Auto Approve can help you compare quotes so you can start saving money today. Contact us today to get the ball rolling!GET A QUOTE IN 60 SECONDS

The word refinancing is thrown around all the time these days. From mortgage refinancing to student loan refinancing, everyone is buzzing with talks of low interest rates. But what exactly is refinancing, and how does car refinancing work? In this article we discuss what refinancing is, how car refinancing works, and discuss how it may be beneficial for you to do right now.What is a Car Loan?A car loan is a secured loan that can help you finance a new or used car. A car loan works in a similar way to other types of loans. A financial institution will pay for your car and you will repay them in monthly installments with an additional fee (interest). Your car acts as collateral and, if for any reason you cannot repay the lender, your car will be taken away. It's because these loans have this collateral that they're considered "secured."What is Refinancing?Simply put, refinancing is paying off an existing loan with a new loan, ideally a loan that has better terms. Refinancing a car to better terms often results in saving money, either in the long run by reducing the payment period or interest rate, or in the short term by reducing monthly payments.What are the Benefits of Refinancing?Save Money with a Lower Interest Rate You may be able to secure a lower interest rate, either because of the current economic climate, or because your own personal financial situation has improved. This is the primary motivator for people to refinance. By lowering your interest rate, you are lowering your monthly payments and will end up saving money over the course of the loan.Save Money with a Shorter Payment Period When you refinance, you may be able to change the terms of your payment period and shorten the period. This can save you money overall, as the sooner you pay back the loan, the less interest you will ultimately pay.Reduce Your Monthly Payments with a Longer Payment Period If money is a bit tight for one reason or another, car refinancing may allow you to lengthen your payment period. This will allow you to pay off the loan over a longer amount of time, reducing your monthly payments significantly. You will end up paying a bit more over the length of the loan because you will be paying interest for a longer period of time, but it can give you breathing room if you need it.When Should You Refinance?When Interest Rates Are LowRefinancing is all about striking when the iron is hot. And by that we mean when the interest rates are hot. 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. Rates are currently very low, so there is a good chance you can get a lower APR now than you could previously.When Your Credit Score Has ImprovedInterest rates are largely dependent on the finances of the applicant. Your credit score is one of the most important factors in securing an auto loan with good terms. Credit scores are generally categorized by the below parameters:800 to 850: Excellent credit740 to 799: Very good credit670 to 739: Good credit580 to 669: Fair credit300 to 579: Poor creditIf your score has increased from good to very good (670 to 740), or from very good to excellent (740 to 800), it could be a great time to consider refinancing. 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 to see if you can get a better rate. When Your Income Has Decreased or Your Expenses Have IncreasedIf money is tight due to a loss of income or an increase in other monthly expenses, refinancing might be a good option to give your wallet some breathing room. If you can lengthen your payment period, you can pay off the loan over a longer amount of time, reducing your monthly payments significantly. When Should You Hold Off On Refinancing?When Your Existing Loan Has Prepayment PenaltiesSome loans build in prepayment penalties to offset the lost interest that comes with paying a loan off early. These penalties can be quite high, so it is important to read the terms of your loan and decide if the savings from refinancing will outweigh the fees from prepayment. If you are unsure, call your lender directly to find out how much it will cost.When You Need a High Credit Score for Another ApplicationWhenever you apply for a loan or credit card there is a credit check, and hard credit checks (as opposed to soft checks) and new lines of credit can negatively affect your credit score for about a year.This is because how new your credit is affects your score – but, as long as you maintain a good history of paying on time, this new credit will actually help your score in the long run. And, fortunately, there's a fourteen day window allowed by the big three credit bureaus that allows for all credit inquiries in that span to count as one credit hit.All that said, if you're applying for a mortgage or starting a new lease, it might be wise to wait until after that is settled to refinance your vehicle.When The Timing of Your Loan Isn’t RightWhile you can technically refinance at any time during the life of your loan, there are certain times where it will not make sense or be beneficial to refinance. You’ve had your existing loan for less than six months. It takes some time for your credit score to bounce back after taking out a loan, so waiting at least six months will be helpful if you hope to get a better interest rate than before. If this is your first loan, it is recommended to wait at least a year to prove that you have a history of on time payments.You have less than two years left on your loan. Car loans accrue interest over time. Because of amortization, your earlier payments pay off more interest than your later payments. As you near the end of your loan, you are paying less and less on interest and more and more on principle. The longer you wait to refinance, the less beneficial it will be to do so.How Do You Refinance a Car?If it seems like car refinancing might be a good idea for you, let’s go over how to start the process of refinancing. It's a hassle-free process (especially when you use Auto Approve!) and can save you money in the short and long term.Do Your ResearchMake sure you are as prepared as possible. Request a credit report, which you can do once per year for free, and make sure your credit score is good. Check that everything is accurate on your report. You can petition the credit bureau if there are any inconsistencies or errors. Look at your current loan contract and make sure you are aware of any penalties for which you may be responsible. Call your lender directly if you have any questions or want to review any of the fine print.Apply to a Few Different LendersThe application process is similar to your original car loan application. You will need the following to get started: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. Compare Rates After all of your applications are submitted, you should start hearing back with different car loan APRs and terms. Compare all of your offers and choose the one that gives you the best rate and makes the most sense for your personal situation. When you use Auto Approve for this process, one of our agents will talk you through the best options and help make sure you understand your new contract completely. (Oh, and when you refinance with Auto Approve, there are no mark-ups, so you're actually getting the best rate available every time!)Sign and Start Saving MoneyOnce you have picked the best car refinancing option, sign on the dotted line and start seeing the benefits of refinancing immediately.Refinancing your car loan is a simple process that can save you a boatload of money.Auto Approve can make this process even easier and simpler for you! Just fill out some basic information and we can help you start comparing rates today. We never mark up your rates, because we're passionate about passing the savings right on to you. So if you're thinking, “Boy howdy, I better get to refinancing now!,” contact us today, Cowboy! (Seriously, what are you waiting for?)GET A QUOTE IN 60 SECONDS