Reduce Your Loan Payment By Refinancing Your Automobile
If you refinance an auto loan, you can reduce your monthly car payment. Consumers refinance for a variety of reasons. The refinance of an auto loan can be a great way to either reduce your monthly car payment or accelerate the repayment period.
Auto Loan Refinance Process
The refinance process is generally the same process used in obtaining the original auto loan. The consumer may wish to start by contacting the current auto loan lender and finding out what the current used car refinance rates are. Your current lender may have reduced refinance rates since the original auto loan was taken out and have a better loan rate they can offer you. If not, you can check with a variety of sources to compare auto loan refinance rates. Most local newspapers have a local rate monitor? in the business section of the paper that is published once a week or so.
Credit Score Can Affect Auto Loan Refinance
Not everyone has perfect credit. There are a variety of lenders that have auto loans available for those with less than perfect credit. Some lenders specialize in making auto loans to those with less than perfect credit. Many lenders will allow customers to reapply for a refinance loan after the customer has made six or more payments. If you had to pay a higher rate when your auto loan was first taken out and your credit and or income status has improved, you may be a great refinance candidate.
There are many articles that go into great depth about credit scores but let's take a quick look at the critical areas for basic understanding. Each person who utilizes credit has three standard credit scores, as a person's creditworthiness is tallied separately by the three major credit reporting agencies. The scores - known as FICO scores, for Fair Isaac Corporation, the company that pioneered credit scoring about 50 years ago - range from 350 to 850. The most current national average suggests that the national median score is about 673.
While the math behind FICO scores is extremely complex, there are several key principles that you can follow to raise them. Here are the key factors:
1. 35 % - History of how your bills are paid on time
2. 30 % - The ratio of your "debt to available credit"
3. 15 % - Number of years you have managed credit
4. 10 % - Over the last 60 days, how often have you applied for credit
5. 10 % - The different types of credit that have you managed (auto, home, credit card, etc)
Online Auto Loan Refinance Calculators
Many online auto finance sites have auto loan refinance calculators on them. They are easy to use and can provide you with a quick comparison of payments at various rates. The refinance of an auto loan can make a noticeable change in the auto loan payment amount.
By Dale L. Peterson
President and COO of myAutoloan.com
Dale is a seasoned veteran of the auto finance and financial services industries: Prior to co-founding myAutoloan.com, he served as SVP for marketing at AmeriCredit Financial Services, Inc. in Fort Worth, Texas, Corporate VP, marketing and sales at Harland-Clark, Inc. in San Antonio, Texas. Dale earned a BS degree in marketing from Ball State University, and a MBA from Kellogg at Northwestern University in Evanston, Illinois.
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