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When Can I Re Fi The car-loan?
Stats: 1.5 months having the new car 9.24% Is the rate from my bank 680 was when I got my car. 693 is now my current score. FICO states I could go 8.3%
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1 Reply
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Refinancing your car loan might be a good idea if you’re looking to lower your car payments. But wait! Depending on the details you provided, I would like to note a couple of things regarding when and how to go about this:
Current Situation
Time Since Purchase: You purchased the car 1.5 months ago. Some lenders offer refinancing just after the car has been secured. Still, sometimes, it is ideal to put it off for about 3 to 6 months so that there is a payment record.
Credit Score Improvement: From what I gather, you were previously rated at 680, but now your rating is 693. This would be a good change, as you could get preferred rates because of this rating.
Interest Rate Comparison
Current Rate: Last you stated, your rate is 9.24%. Based on your FICO-noted suggestion rate class qualification of 8.3%, this seems to be much higher than what you may be expecting.
Potential Savings: If the situation is right (e.g., if you refinance to a loan with low rates), a lowered rate will help you make lower payments over the duration of the deal.
When To Refinance
Minimum Timeframe: It is important to note that you should wait about three to six payment times since this increases your credibility as a buyer, giving you better chances for a loan at an acceptable rate.
Look Out for Fees: Before I undertake refinancing, it is important to check whether there are any prepayment penalties on your current loan, as this could easily wipe out any advantage I could gain.
Instructions for Saving Refinance
Seek Recommendations: While seeking a vehicle loan, it would be prudent to ask several banks, credit unions, or other lenders for the rates at which they can fund the loan. This will ensure I get a good deal.
Find Information: Details such as proof of income, the automobile, and details of existing loans could facilitate refinancing as many required details can be collected from these documents.
Receive a Letter of Intent: Most lenders provide a letter of intent, which is also beneficial as it does not affect the applicant’s credit rating; it showcases the applicant a rate range of relevant options.
Credit Effects
Soft vs. Hard Pulls: It could be prudent to do rate shopping within 30 days to reduce the number of hard inquiries to one, as many lenders only require the hard inquiry in most cases.
Maintain Vigilance: Monitor your score before and after refinancing the car loan and improving the rate. If your score improves, your chances of being eligible for an even better rate increase.
As a homeowner, consider consolidating your car loan now, although slightly delaying this step could improve your chances of obtaining a better rate. So check your score, compare the deals, and remember the costs of the existing loan. Raise further inquiries if you have any!