Many people do not realize that it is possible to lower their car refinance interest rates by simply doing some research. In many cases, a high annual percentage rate (APR) is set for the term of a new auto loan due to poor credit or a lack of knowledge on behalf of the car buyer. Luckily, there are many options available to those who are overpaying. Before making an attempt to get an auto loan refinance, there are a few important factors that need to be focused on.
It is significantly important to maintain a steady job with the same employer for a minimum of six months. Many lenders want you to have 1 year or more – so in this crazy lending market, with more regulations in store for the banks, figure more is better. So just to reinforce what is taking place in the market, in some cases, 1 years of employment is required but having a steady job is the key. This will provide proof to the auto refinance company that a steady income is present. Without a reliable source of income, there is no security in knowing how monthly payments will be made each month and thus, a turn down is highly probable.
It is crucial to do as much research and investigating as you can before choosing a company to refinance with. First of all, the initial lender (the company you are using now) will not refinance an auto loan that was processed through their establishment. Why? Because it is not to their advantage to lower your interest rate so they will say no. They already have the borrower trapped with high interest, so it would be a bad business move for them to decrease their own profits by lowering the APR on one of their own loans. There may be many options to choose from locally, but there are even more available companies online. Through diligently searching and comparison of rates, the borrower should be able to find a company that holds the ability to satisfy the desired monthly payment.
When seeking low interest rates, the most valuable component is being well-educated and knowledgeable in the credit score/history that you obtain. Some of these services are really worth it if you want to get ahead in the borrowing game. Car dealers often look for the opportunity to take advantage of people that are not aware of their own credit scores. This lack of knowledge allows a few dealers to add an additional increase to the APR, while telling the buyer that it is due to bad marks that showed up on their credit check (whether there are bad marks or not). The embarrassment and lack of knowledge/questioning makes it hard for the purchaser to argue the facts with the dealer, allowing the less than fair rates to follow throughout the entire term of the auto loan. Just so that you know, working directly with a lender is the best way to get the lowest car loan rates possible.
A credit score is a good source that can be used to determine when it is best to refinance. A person can begin watching their credit score for a few months before applying for a refinance loan, using an increase in their score as a cue to start applying for a new auto loan. A couple points can make a very large difference in the rate that is given, and can save thousands of dollars by the end of the loan term.
Making car payments on time and paying off a couple of credit cards before trying to get an auto refinance loan will also provide more options for a person seeking to do a refinance loan. On-time monthly car payments are a necessity for a majority of companies that work with refinancing loans. This shows the integrity of the auto loan seeker. Credit cards can be a positive influence on credit scores, but too many credit cards with high balances will provide negative feedback. Even a few extra payments on credit card balances can make a noticeable difference on a credit score.
A car loan refinance can allow affordable monthly payments, along with saving a person thousands of dollars by the end of their car loan term. This is a smart move for those who cannot afford their car loan payments in today’s uncertain economy. The extra money that is given to the bank/financial establishment could be used for paying other bills, or even enjoying extra luxuries. Finding a new source for an auto loan may take an excessive amount of time and energy, but the benefits can make a significant difference in the quality of life that is achieved.