Auto Loan Refinancing FAQs

Get Your Auto Loan Refinancing Questions Answered by the Team at Autoloan Credit Express

Refinancing is a subject that many folks may not know a lot about. When people don't understand a topic, it may lead to confusion and wariness. The truth is that refinancing an auto loan might be an advantageous thing for many car owners to consider. Before people can consider going through a refinance, they may have a lot of questions. Luckily, the team at Autoloan Credit Express, located at 428 Pleasant Street in Fall River, MA, can answer any question you might have about the world of car financing. Below are some frequently asked questions about refinancing, as well as the answers.

Frequently Asked Refinancing Questions

Can Refinancing My Car Loan Hurt My Credit?

You will likely experience a temporary drop in your credit score that will go away in a couple of months. The reason for this is because a lender will need to do a "hard" inquiry into your credit report, and when that happens, your score drops. Your credit score will bounce back quickly. People who are considering refinancing can reduce the temporary impact to their credit by choosing a lender before they apply. The fewer "hard" inquiries, the less of an impact on you score.

The brief drop in your credit score will be worth it in the long run. Refinancing can lower your monthly payment and lower your debt amount. Credit bureaus like to see both of those things, and your credit score will benefit.

How Soon Can You Refinance a Car Loan?

Quite simply, you can refinance your car loan any time you want. There may be some caveats to consider, however. Your lender may have rules that require you to wait a certain period of time, like six months, before you refinance. Additionally, you may want to consider other factors before you decide to refinance your auto loan.

You may want to wait until your credit score has improved. Once you have seen a boost in your score, the time to refinance your auto loan might be in hand. A higher credit score can mean that you will qualify for an improved rate and term. The experts at Autoloan Credit Express can help you determine whether now is an advantageous time for you to refinance your car loan.

Should I Extend the Term of My Auto Loan?

It depends on your financial goals. Extending the term of your auto loan certainly has benefits. It can provide you relief in the form of reducing your monthly payment. For some folks, that reduction may provide the breathing room they need in their monthly budget.

Extending your term may also increase the cost of your auto loan in the long run. Increasing the length of repayment will also increase the amount of interest you pay. For some people, that might be an acceptable return for getting the lower monthly payment. You can also reduce the amount of finance charges by paying extra on top of the monthly payment when you can.

What Role Does My Interest Rate Play on My Car Payment?

A higher interest rate will increase your car payment. Essentially, the interest rate you receive on your car loan is a reflection of the risk the bank is taking by lending money to you. A bank or credit union looks at several factors, including your credit report, when determining this risk. When your credit score is higher, refinancing can help you reduce your interest rate. This reduction can mean that you have a lower car payment, and that you will pay less in finance charges over the life of your loan.

If you have any questions about interest rates or refinancing, you should contact our team. We are the experts when it comes to the world of auto financing. Reach out to Autoloan Credit Express, so we can help you with your car loan refinancing today.