If you are considering refinancing your car loan, taking steps to improve your interest rate could increase your monthly savings by a hundred dollars or more when you refinance your loan. Of course, this might be easier said than done. How can you control the interest rate a bank will offer you? Actually, there are a few things you can do that will help you get the best interest rates on your car loan refinance.
It’s important to understand what determines your interest rate if you want to get a lower one when you refinance. The factors a bank uses to determine your interest rate that are relevant for car loan refinancing include:
By leveraging these factors to your benefit, you can get the best possible interest rate on your car loan refinance.
It’s not always possible to raise your credit score quickly, so it’s best to start on this right away. The first thing you can do to improve your credit score is simply to make your car payments on time. This goes for any other payments you may have. Any account that is delinquent by 30 days or more can be on your credit report, which will hurt your credit score.
Meanwhile, try to limit activities that can potentially reduce your credit score, such as opening new credit accounts, taking new loans, or anything that leads to a hard credit check.
Improving your credit score by 50 points could cut your interest rate in half and improving it by a hundred points could cut it by nearly 75%!
Have you been trying to decide whether to ask your boss for that raise you so richly deserve? Or have you been offered a new job that will pay significantly more? If you’re considering refinancing your car loan, it might be worth it. Your income is one of the factors that lenders will take into account when deciding what interest rate to offer you.
Another good thing to do when trying to get a better interest rate is to pay down your debts. This can help you in several different measures that lenders use, such as debt-to-income ratio and credit utilization. Debt to income ratio improves if you get a higher income or have less debt.
Credit utilization is the portion of your available credit that you’re currently using. You could potentially improve this ratio by getting more credit, but getting too much new credit can negatively affect your credit score. Doing this far in advance of car loan refinancing might be okay. The closer you are to the time you want to refinance, the better it is to just pay down debt.
Lender policies can make a big difference in the interest rate they offer you. Each Lender prefers different types of applicants and will offer their preferred applicants better rates. For example, a better credit score will almost always equal a lower rate, but some lenders give much steeper penalties for having low credit.
To make sure you’re getting the best rate for you, it’s important to shop around between lenders. When you work with iLending, this process is done for you. As part of our You First Approach™, our team will review our vast network of national and local lenders to compare the options available to you. We’ll then recommend the best loan to achieve your specific goals. This process gives you peace of mind that you’re receiving the best possible interest rate on your car loan refinance.
iLending works with a wide range of lenders around the country, ensuring you have access to many different policies that may potentially address your needs. Our refinancing consultants understand these policies and know how to help you find the lenders who make the best offers to applicants like you. They can speed up the shopping around process for you, making it easier for you to get the best rates.
Want to see how much you can save with car loan refinancing? It takes two minutes or less to complete a refinancing application with iLending. Then you’ll get loan offers to choose from and can connect with a loan consultant to get more and better offers.
Contact us today to get the car loan refinance process started.