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Tips For Refinancing Your Car Loan

By Liz Opsitnik
Saturday, Aug 15 2009 18:44

If you need to cut some of your monthly expenses or if you had bad credit when you bought your car, look into refinancing your car loan. It takes a few minutes to apply online, and you’ll get a response almost immediately. See which lenders offer you the best rate and make sure the new loan is for the same term or less to save the most money.

Even if you don’t have a prime credit score (700 and above), you can still qualify for a refinance car loan. There are sub-prime and specialty lenders who can refinance car loans for consumers who don’t have perfect credit.

Wait three to six months after buying your car to look into refinancing your auto loan. The more payments you make, the better your credit will be when you apply for a refinance car loan. You don’t want to wait too long though. You’ll want to start saving money as soon as possible. Refinancing can save you hundreds to thousands of dollars over the life of the loan.

Remember to keep all your refinance loan applications to a one week period, like you would for a regular auto loan. When you space out credit applications, it negatively impacts your credit score. But when you apply all at once or within several days of each other, it counts as one credit inquiry and will not affect your credit score.

When you refinance your car loan, it also helps your credit. The new lender pays off your current loan in full. This shows up on your credit report as a loan paid off, on time in full. Even though you will have a new loan, it still increases your credit score.

Confused or unsure about some of the car loan terms used in the article? Click here for our Auto Loan Glossary.




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