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how long should we wait before getting a re-fi on an auto loan?
I first got my auto loan when my score was a eq476 my score is now a eq575 and going up. I don’t have my other scores as of now because TU cannot generate a score for me for some reason, and ex is making corrections to my score so it’s not accurate right now. I know if you’re ready to do so soon, it won’t hurt you but sometimes give you a better rate. Any help?
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1 Reply
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When is the best time to refinance your auto loan?
Refinancing an auto loan is a good move especially when your credit score has been getting better since you took the loan.
In refinancing there are the following points of consideration, on whether to go forward and the timing of it:
- Time these circumstances occur:
Current Score: Your credit score was 476 and now it is 575 and with hard work it could only go up. Most lenders prefer giving borrowers with better rates however in your case, it is advisable to wait further until your credit score most likely goes 600 and then secure the best rates one could imagine.
Watch for Updates: All perspectives are provided but the perspective of all the other credit scores are not provided rather you only have them for Equifax which is understandable given the circumstances, you have to keep an eye on Equifax and the developments looks like on TransUnion and Experian. if you are expecting more developments it would make sense if you waited a bit longer.
- Check For Existing Loan Rates Whenever Necessary:
Current interest rates: Another fact to consider would be checking the present market rate for auto loans. If the rate of taking a loan has worsened since the time of you financing getting your vehicle, it would be in your favor to refinance the vehicle even if that means the credit score remains as it is.
Loan Terms: Evaluate your existing loan terms, if you have a high-interest rate or bad terms, it might be worthwhile to refinance the loan sooner rather than later, even if your credit isn’t the best.
- Time Since Loan Origination
Wait for a Few Months: For a car loan that you have had for less than six months, it may be worth waiting a bit longer. In order to refinance, lenders often want their borrowers to display a bit of a payment history to prove they have made a decent effort in making their payments.
Payment History: Make sure that you have made regular payments and on time on your current loan. That is known as a good payment history and it can work for you in gaining an approval to refinance.
- Assess Your Financial Situation
Debt-to-Income Ratio: Lenders will consider your DTI ratio when refinancing, so ensure that your overall financial situation is conducive with a refinance.
Future Changes: If the credit outlook does change, for example, one expects to take up a higher paying job or does not have as much debt, then it would be prudent to wait until such changes have been incorporated into the credit profile.
Conclusion
In your case, you may want to remain patient and wait for your Equifax score to improve considerably, under 600 would do better. Just as other aspects in life are a part of interest rate management and no one strategy cuts across all periods, be attentive of the current rates and your performance. If you appear to have a minimal risk profile, quickly check with your lenders and request a screening for a refinance quote if there’s been a sharp drop in the market rates. Or else, set plans in motion with lenders concerning requirements, and options available to you in light of your recent credit history.