Tag Archives: auto loan

Auto Loan Refinance: 5 Questions to Ask

Are you ever told by your friends and relatives that you should get a better auto loan offer? Auto loan Refinance doesn’t prove to be fruitful in every case. But for some individuals, it’s a jackpot.

The ticket to success in refinancing is to know the right timing and plan. People have solid reasons to seek auto loan refinancing. If your answer to any of these questions is yes, consider refinancing a car because there are chances that you could really hit the jackpot.

1. Is paying a lowered monthly payment your priority?

As reported by Experian, the average monthly payment for a used car in 2021 is around $430. That’s a hefty sum of money, especially when you barely have just enough money.

The primary benefit that refinancing offers is that you can pay off the loan in a longer time than the original plan. Each of your monthly payments becomes less through this option.

The drawback is that you’ll be paying monthly payments for a longer amount of time. It results in paying extra interest over the life of your auto loan.

2. Do you wish to lessen the life of your auto loan?

Doesn’t it sound great to save up money in your bank than send it to a lender? Absolutely, yes! The other highlighted reason why people prefer refinancing a loan is to reduce the interest rate.

It occurs by two means. You can refinance the auto loan for a shorter term, or you can find a refinanced loan with a lower interest rate. These two options will definitely save you a ton of money!

3. Did you purchase a bad deal from the car dealer?

Car shopping is not as easy as it seems. You are continuously bare to scams and high-pressure sales tactics, which leads you to sign a not-so-ideal loan plan. Car dealers tend to undervalue the car, which leads to a higher loan amount on it. Besides, dealers also mark up the interest rate and profit off the extra payment that you pay.

However, there is a way to escape from this plotting. You can apply for a better car refinance to get a better loan. If you choose to refinance through CarLoanRefinancing, we never plan on charging extra. So it is a hundred percent safe and secure option to get a loan refinancing!

4. Did your credit and financial conditions change?

If you are a quick learner, then like most credit holders, your credit score would have taken the road towards progress since you’ve learned how to manage credit score and history better. Your financial condition might have also improved if you’ve made growth in your career and earnings.

These are the perfect times when you should consider refinancing your auto loan. Even if you are still working to make your credit score better, you should look for loan refinance offers through CarLoanRefinancing. It is because we pay attention to other factors as well rather than credit score only. Keep an eye on the recent options, and apply right away when you find a suitable loan refinance plan.

5. Do you wish to take out a co-borrower from your loan?

Cars are an expensive asset, and most of the time, no one is financially well-off to own a car individually. For this reason, people tend to share a car (and loan as well) with another person or co-borrower. There’s another possibility that your credit score was not good enough to take out a loan, and you needed a cosigner on the auto loan.

If your financial circumstances have improved and you wish to remove the cosigner or co-borrower from the loan, you should refinance it. Keep in mind that if you plan to refinance an auto loan through CarLoanRefinancing, you’ll need to have permission from the cosigner/co-borrower.

How Does Refinancing a Car Loan Through CarLoanRefinancing Work?

Paying off auto loans seems like a heavy burden on the shoulder and the budget as well. The only hope that keeps us going is that we are not stuck with it for a lifetime. We refinance our auto loans and get to pay lower payments or interest rates or even both. Refinancing a car loan helps you save up a hefty sum of money in the long journey. To give a short example, loan borrowers save up to $912 per year by refinancing.

If you have never considered refinancing, you should. It is an uncomplicated process if done through CarLoanRefinancing. We hold years of experience in this field.

What Are the Steps to Refinance My Car Loan Through CarLoanRefinancing?

It doesn’t require any rocket knowledge in refinancing a car loan. Through CarLoanRefinancing, we have simplified refinancing even more by using the latest technology. We have award-winning customer support that helps you walk through the entire process step-by-step.

Step 1: Go through your rate.

Visit our online form and check out what rate we are offering. It takes less than five minutes and only basic information, such as:

Name
Birthdate
Home address
Education status
Income proof

We perform a soft inquiry on your credit, meaning this step doesn’t affect your credit score. We get most of the car information by car and the car loan information you’ve provided. If we can’t, we’ll require other details like car model, trim, and mileage.

Step 2: Review loan offers

If you pass the previous step, we’ll give you loan offers to review. This step helps you choose the right monthly payment amount, the length of the plan, and the interest rate.

The loan amount we’ll show will be higher than your original loan balance. It’s normal because your lender will refund the leftover money once the previous balance is $0.

Step 3: Submit your application form.

After selecting any plan you find suitable, you’ll need to provide additional information like your social security number and your insurance details. After this, we’ll instantly verify your application and redirect you to step number five.

Step 4: Submit any additional documents.

Sometimes, we also require additional documents like a driver’s license or a copy of your pay stub.

If we need any extra information, we’ll reach out to you right away. Your cooperation is a must through this time so keep checking your email to avoid any inconveniences in the application verification.

Step 5: Check and sign the final documents.

Once we’ve collected and verified the required documents, we’ll call you to check the loan terms & conditions and sign the permission form for a hard credit check. Most of the time, a hard credit check barely affects your credit score. According to FICO, the consequences of the hard inquiry would be marked off completely within two years.

After receiving your signature on the promissory note, we’ll go through the vehicle and insurance details once again. We’ll also check whether you’ve signed the documents to start working with CarLoanRefinancing or not.

Usually, we do these steps electronically, but due to varying laws and policies in different states, you also need to sign a physical copy. For this purpose, we’ll mail you the forms along with a prepaid envelope. Some states also demand a notarized form. For this purpose, we’ll provide detailed instructions that you have to follow.

Step 6: CarLoanRefinancing pays your old loan

After going through the official paperwork, we’ll deliver a check to your previous lender to clear your old auto loan. If we’ve overpaid the lender, he’ll have to refund it back to you.

Make sure to pay off your loan entirely until you see $0.

After we’ve cleared the old balance, the title transfer process will start. It may take up to 60 days to complete it. We may transfer the loan to your state’s Department of Motor Vehicles or under your name.

Step 7: Shift to paying your CarLoanRefinancing powered loan

After CarLoanRefinancing clears your previous loan balance, you’ll start to pay for your new loan monthly. You should pay the first payment within 30 days of initiating the new loan. We’ll plan the process in an organized way so that you don’t have to make payments for two loans in a month.

We’ll make things easy for you by presenting several easy payment methods.

Switching to automatic payment will lift off the burden of making manual payments monthly. We also offer a bi-monthly payment option. You can make such payments via autopay or manually and check your paychecks regularly.

All in all, CarLoanRefinancing has come up with an easy and convenient method for refinancing a car loan.

Your Ultimate Guide for Auto Loan Refinance

Americans incur a hefty sum of $1.2 trillion on auto loans alone. It takes about ten percent of the overall consumer debt. With increasing unemployment due to COVID-19, Americans are finding effective ways to save money where possible, including auto loan refinance to reduce their monthly payment costs.

Auto refinancing may sound like THE best idea, but most people are unaware of what it entails and its long-term effects.

All Must-Knows About Auto Refinancing

If you are looking for capable ways to save money from your monthly payments, consider refinancing a high-interest loan into a lower-rate loan. It will help you save money over time.

If you are paying pricey payments each month, refinancing the auto loan to a long-term plan would result in lower monthly payments. However, conditional on the number of months you add to your plan, you’ll automatically have to pay more money over the lifetime of the auto loan. Therefore, do calculations to estimate how much additional money you’ll be paying over the added months.

Beware! Auto loans usually come with an extra fee, and it also ruins your credit score badly. To conclude this, auto loans are not guaranteed “money savers.”

At CarLoanRefinancing, we will provide in-depth answers to your question. So you make the most well-informed decision possible. Here are some FAQs about auto refinancing and related outcomes. Go through them carefully and decide whether you want auto refinancing or not.

What Is Auto Loan Refinancing?

Auto loan refinancing is the process of replacing your already existing loan with a new loan at a different interest rate. Such loans are taken for cars and paid through monthly payments, which may take over several years.

When Should You Refinance Your Car?

One of the essential factors when considering refinancing is the available interest rate. Interest rates tend to fluctuate regularly, so the interest rates may have dropped since you’ve taken out your original auto loan. Even a 2 or 3 percent drop would save you a large sum of money over the entire loan period.

If your financial situation has improved over time, your lender should look at your debt-to-income ratio. If it’s in good condition, your lender will most likely reduce the interest rate. It will gradually save you a hefty sum of money.

What Items/Documents May Be Needed for a Car Refinance?

To refinance your loan, the lender needs the following information/documents:

Your ID
Proof of income
Financial history
Proof of residence
Your vehicle’s information

How Does Refinancing Affect Your Credit Score?

When you apply for a loan, lenders tend to check your credit. They perform a hard inquiry on your credit to check your credit score and history. It’s why refinancing lowers down your credit score temporarily.

If you hold certification for refinancing, you could save money from the monthly payments. If you have other debt to pay, you can utilize the money you’ve just saved.

What Are the Tips I Should Consider When Refinancing?

If you still plan to get an auto loan to refinance, here are some top tips to help you.

Your credit score and profile, car mileage, model, and trim will lead the lender to determine the new interest rate. So it’s best to keep these factors in good shape.

Additionally, the lenders will consider your loan-to-value ratio and the number of payments left to be paid for the original loan to come up with benefits for both parties. When considering refinancing a loan, it’s important to learn how much the car has depreciated, your loan-to-value ratio, and your current loans.

Once you get the desired interest rate, try your best to understand any additional fees or prepayment penalties so you recognize every single penny you will be paying.

If you have understood all of the above factors, take the next step and refinance your car with CarLoanRefinancing right away!

How Credit Scores Affect Car Loans?

Everyone fully knows that purchasing a car costs a hefty sum of money. But little to no people are aware of how credit scores affect car loans. Affording and buying a new ride requires financial help, usually as auto loans from lenders. Often, the added interest rate costs us thousands of extra dollars. It is what restrains people from getting a new vehicle.

Do you know what determines the interest rate that we have to pay? Our credit score. Let’s learn about how credit scores affect car loans.

What Is a Credit Score?

Before getting into further details, let’s discuss what credit score is. Your credit score consists of three digits, which gives the loan lender an idea about your credit score management and loan repayment ability. There are most reliable and accurate consumer credit reporting bureaus, TransUnion, Equifax, and Experian. They give information about your financing and payment history and generate your credit score as well.

What Do Lenders Search for in a Credit Score?

Let’s cut to the chase: they want to get back their money. The dealer, bank, or credit union loves to assess the possibility that you will be able to pay them back or not. They complete this assessment by investigating your credit history and recent finances. A monthly credit report and any current monthly payment plans give them this information. The following five fundamental components comprise your credit balance. And each of them has separate assigned weights.

Payment History (35%)

It gives an account of how you have kept up with your monthly payments, previous loans, and credit card payments. Although, bankruptcy, a mortgage default, and late or undone payments drastically affect a section of your credit score. And make it hit rock bottom. However, you can work towards making your credit score better by paying off lower balances.

Outstanding Debt (30%)

As the name suggests, having fewer debts results in higher chances of getting credit. As we all know, the more debts you owe, it would be much of a hassle to pay off everything at once. This debt assessment is also referred to as “credit utilization score” Ideally, try expending less than 30% of your total credit.

Length of Credit History (14%)

Having a long track of credit history proves to be very beneficial for your credit rating. But it is difficult to gain such lengthy credit history when you are only in your early twenties. It is the reason why older people tend to have a much better credit score.

The frequency of credit use also matters. Try to use your credit often. It displays how well you can handle the debts and puts a good impression on the auto-loan lender.

Account Age (10%)

Having a longstanding and excellent credit history on each of your accounts affects your credit score greatly. But, opening many new credit cards shortly after each other lowers your overall FICO score. The lenders often wonder about your ability to pay the debt, so you avoid doing so and establish a long-term account to earn the trust of auto-loan lenders.

· Types of credit used (10%)

If I talk about a lender’s point of view, a variety of credit used is a good sign. The lender wants to get an idea about your abilities when it comes to handling several credits. Like student loans, auto loans, and credit used each month.

What Is a “Good” Credit Score for an Auto Loan?

Lenders do have the right to set their standards when judging a borrower’s FICO score. Experian says that “high scores represent better credit decisions and can make creditors more confident that you will repay your future debts as agreed.”

But you may still wonder, what’s the “good credit score”? 700 score is a must, meaning lenders prefer borrowers having a score about this number. Anything above 800 is more than enough. Once you get a credit score over 800, you can negotiate when deciding the annual percentage rate and loan term. Most borrowers in the USA have a credit score of 657.

How Does Credit Affect My Car Loan Rate?

Your interest rate varies widely, depending on your credit score. The better your credit score is, the lower the auto-loan interest rate you will get. It is a fact that a person with a bad credit score tends to pay 10% more points than an individual with a good credit score.

When a situation involves buying a car, your credit score matters a lot. Besides, it also affects the cost of interest that you have to pay each month. A stellar credit score gives an upper hand in every situation related to auto-loan and corresponding services. It favors millions of people, and you can be one of them as well.

For people who have a rough credit score, this can pose many problems. It can lead to many hazardous challenges in the future as well. But don’t despair! We have listed some ways to improve your bad credit score.

So, how credit scores affect car loans? It affects you in many ways! However, you can also escalate your credit score by neatly managing an auto loan. It adds benefits for you for future car, truck, or van purchases.

Now that you are well aware of all the facts and tips about auto-loan, you should get ready to buy your dream vehicle!

Preliminaries for Refinancing Your Car Loan

By lowering your interest rate, refinancing a car loan can help you save money. The procedure entails replacing your existing auto loan with a new one from a different lender. Your car will serve as security for the new loan, just as it did for the old one. Here is how auto loan refinancing works, as well as why and when you should refinance your car loan.

Sometimes, at the beginning of their financial journey, people pay higher interest rates on car loans because they have not proven they can pay back the money on time from a lender’s point of view. They usually have a “thin” credit file, indicating that their credit history is not valid enough to rely on their ability to repay the loan. That suggests that you need to improve your credit, and while you are at it, we’ll also go through some other important factors such as when and why it can be a good idea for you and what you should know before looking into new options.

When Is It a Good Time to Refinance Your Car Loan?

Your credit rating has improved. Even if our credit is not perfect, many of us finance a new car purchase, especially first-timers. We can receive better auto refinancing interest rates as we become older and our credit scores improve. This is one of the many crucial reasons why knowing your credit score is vital. If your credit score improves from good to excellent, it may be a wonderful time to refinance.

If you financed your car at high-interest rates, now is an excellent opportunity to refinance. The last one is when you have established a good payment history.

What Are Your Requirements Before Refinancing?

1. Your credit score

Knowing your credit score is essential for determining what refinancing options are available to you. If your credit score has dropped, it is unlikely that you will get a loan with better terms.

2. Information about your vehicle

Financial institutions will require specific information about the vehicle you are refinancing. Bring your car’s make, model, VIN, and mileage with you.

3. Compare Offers

It is now on you to find the most significant price features and digital capabilities. It should be less difficult to repay the loan for you. You should investigate several financial institutions in your neighborhood, just as you would when shopping for a car. Look at more than just the rates. Consider the services, and then it was to obtain it.

The good news is that if you submit many auto loan applications in a short period—try to complete all of them within 14 days—FICO will usually aggregate them all into one credit score calculation.

4. Finalizing your choice

Apply with that lender once you have limited down your list of offers to one. The lender will go through the underwriting procedure after submitting your application to see if you qualify.

Pros & Cons of Refinancing Your Auto Loan

Now that you know the procedure, the last thing to find out is the benefits you will be getting from refinancing and the drawbacks.

Pros

Lower Monthly Loan Payments
Payless interest on your auto loan
Remove or add a co-signer.
Change lenders.

Cons

You can end up spending more money in the long term.
Your credit score may be affected.

To sum up, if you can qualify for a low-interest rate and save money in the long term, refinancing is a good idea. Technically, you can refinance your auto loan at any time, even soon after you purchase it, but your actual savings will vary based on where you are in the repayment schedule.

How To Refinance Your Car Loan

Refinancing a loan can be a bit tricky but has both pros and cons. If you are adamant about financing your loan, the following few questions are essential to answer. Well, we are here to help and clear your mind on the first one of how to refinance your car loan.

If you are that kind of a person who has looked over the billboard saying, Do you want an auto loan rate way lower than what you’re paying now? Now is the right time to think over this claim.

We’re here to provide you with a complete picture of how to refinance your car, numerous alternatives for where to refinance, and why a local lender can be the best choice for vehicle refinancing if you’re a car owner looking to refinance your vehicle. Grab a pen and paper to write down insights on all of this.

Impact of Refinancing a Car Loan on a Credit Score

Let us start with some fundamentals to ensure you are on the correct site. What is the effect of refinancing an existing auto loan on your credit score?

To qualify for a vehicle-refinancing loan, you must have a good credit history. Based on your credit history and present financial situation, a potential lender will decide whether to provide you with a loan.

If your credit score has dropped a bit since you first financed your vehicle, it is unlikely that you will receive a better offer now, so do not bother trying. Refinancing your auto loan can sometimes hurt your credit score, bus; the damage is minor in most circumstances and only lasts a short time.

Many first-time car buyers have a “thin” credit file, which means they do not have enough automobile payment history to prove their ability to repay their vehicle loan on time and overtime. All you have to do is be consistent: after a year, as long as you do not fall behind on payments, you can look into refinancing.

How to Refinance Your Car Loan?

When your credit score has improved, you can finally start with refinancing your loan. The foremost step is to determine your objective for thinking of an auto loan.

Here is what else you will need to know:

1. Your credit score

If your credit has improved not long ago, you may be able to get a cheaper interest rate and monthly payment.

2. Your ID and car details.

A lender will ask for information regarding the vehicle you are refinancing.

That is all you need to know!

Where Can You Get the Outstanding Deal on a Car Loan to Refinance?

Now that you are ready to refinance and have done your research, you are probably recognizing that it is time to jump ship and refinance your vehicle loan with a financial institution that can offer you a better rate, conditions, and service.

So, what options do you have?

1. Megabanks

2. Community financial institutions such as small local banks and credit unions.

Which One Is the Best Option for Vehicle Refinancing?

If you acquire a car refinance loan from a community financial institution, you get to start with your auto financing. This is incredibly satisfying if you had a bad initial loan from a car dealer or are ready to quit the impersonal megabank experience in favor of a community-oriented bank or credit union.

Last Verdict

All in All, Refinancing is a terrific approach to obtain the best auto loan for your circumstances. By gathering crucial information and conducting research, you may get better loan terms that save you money by offering a cheaper rate.

We hope that now you know the essential details on how to refinance your car loan and are ready to decide. If you are still unsure if an auto loan refinancing is suitable for you, think about alternative options for lowering your car payment.