Are you looking to make some room in your monthly budget by refinancing your car loan? It’s a smart choice, and it can save you a significant amount of money. Assuming, that is, you get approved at a lower rate than your initial loan. So how do you do it?
Here are five ways you can make it more likely you’ll get approved for car loan refinancing. It’s still not a guarantee, but doing any of these things will increase the chances that you’ll get approved for car loan refinancing at a better rate. The good news is that many of these things are synergistic: if you do one of them, you’re likely doing others at the same time.
Your credit score is one of the big factors in determining your approval and your new interest rate. If you improve your credit score, you will be more likely to get approved, and you can easily see your interest rate drop by 5-8% (for example, 11% to 3-6%) for your new loan.
How do you improve your credit score? First, make all your payments on time. Then, try to improve your credit utilization ratio (the amount you owe compared to the amount you can put on your credit cards) by paying down your credit card balances and/or increase your credit limit. Also, check your credit report to make sure it’s accurate.
Increasing your income can make you seem like a better risk to lenders. Getting a new job, getting a promotion, or finding a side income source can all help you get approved.
You can’t always control when this happens, but it does mean that when you do increase your income, it’s time to consider refinancing your car loan.
Often, lenders look at your debt-to-income ratio before determining whether a new loan would be a good risk for them. While you can’t always guarantee your income will improve, you might be able to improve this ratio by reducing your debt. If you have some extra money in your budget, paying down some old debt is a good idea.
Want to show lenders that you’re worthy of a new car loan? Treat your current car loan right. That means at least making all the payments on your current loan.
You can also improve your odds of getting approved by paying extra on the loan payments. Not only will this reduce your total debt, but it will also improve the relative value of the car compared to the amount you’re asking to refinance.
Don’t forget to pay other expenses related to your car that could, potentially, result in a lien placed on the car. This might include not paying a repair bill, not paying your taxes, or not paying tickets. If you have additional liens on your car, it’s hard to get approved for car loan refinancing.
Not all lenders have the same approval standards. The same person can get very different loan offers from different lenders. You never want to simply take the loan you’re offered from the first lender you go to.
This is where iLending can really help. We partner with lenders all around the country and can bring you numerous offers to choose from. You will see the range of your loan offers so when you choose one, you will know that you’re choosing a good offer. See our savings stories for examples of how we’ve helped people make a difference in their lives with car loan refinancing.
Want to see if you can get approved for car loan financing? It just takes a couple of minutes and won’t affect your credit score. Check with iLending to see what types of loans you might be approved for. If they look good, you can talk to a personal loan consultant for more detailed information.
At iLending, we make car loan refinancing easy. Click here to get started.