Financing auto loan is one of those things that most of us never even think to look.We naturally assume that we are locked in our current car loan – and interest rates – until you pay the loan or sell the car.
Financing auto loans is one of those things that most of us never even think to look into more detail. We naturally assume that we are locked in our current car loan – and interest rates – until we pay the loan or sell the car.
The only conditions for refinancing would be to find another lender willing to provide a loan. In most cases, you will want to go ahead with the car refinance if the new lender can promise you a lower APR (interest rate) than the one you have on your existing loan.
The interest rate you may qualify for depends on two main factors:
- the average auto loan rates of interest in the market today, and
- your current FICO or credit score.
In case you were wondering, “What credit score do I need to refinance my car loan”, here are 3 things you should know:
- If you have excellent credit score above 750, just start applying for auto refinance lenders: The truth is that you can refinance your loan with any credit account, as long as you can find a lender to do so. If you have an “excellent” credit score of 750 or more, you really have nothing to do to prepare to get a loan. Just start applying to lenders and take the best offer that comes along.
- If you have a reasonable or score of around 620, do a little homework first: A score above 620 is considered “fair” and a score above 660 is considered “good”. If you are in any of these ranges, you will want to see if you can beat your score up a bit before applying. To do this, start by running your current report from each of the three major credit monitoring agencies. Go through each report and look for errors that may be holding your score. If you find such errors, do not hesitate to challenge them. Then wait 30 days or so before applying for refinancing and your score should have come much better then.
- If you have a low score – under 620, you can get approved but you have your work cut out for you: When your score is below 620, you have what is considered a “poor” credit. The good news is that you can also qualify for a refinance loan. The key is to apply to at least 3-5 lenders that accept bad credit auto financing. Compare the offers you receive and choose the best. You will be up and running in no time.
Consider these 3 tips when you decide to apply for auto loan refinancing!