How to Negotiate an Auto Refinance
If you’re struggling financially due to a very high car payment, then refinancing your car loan may be an excellent option for you. Auto refinance is an effective way to lower your interest rate and your monthly payments, allowing you to infuse some much needed cash into your budget. But in order to maximize the benefits associated with your auto refinance, it’s important to get the best possible interest rate you can.
But how can you make sure you’re doing everything you can to get the best interest rate? After all, it often seems like you’re at the mercy of the lenders. In most refinance situations, they offer you a specific rate, and you either accept their terms or keep shopping until you find auto refinance terms that meet your needs. But it doesn’t have to be this way. You can take a more active role in securing a better interest rate by negotiating with the lenders you speak with.
The following tips will help you negotiate the best possible deal on your auto refinance.
Know Your Credit Score
Your credit score will play a major role in determining the interest rates you qualify for when refinancing your car loan. In general, the higher your credit score, the more likely you are to qualify for the lowest interest rates available. To get a sense of what type of interest rates you may be able to qualify for, you should first familiarize yourself with the different credit score ranges:
- Exceptional – credit score of 800-850
- Very good – credit score of 740-799
- Good – credit score of 670-739
- Fair – credit score of 580-669
- Poor – credit score of 300-579
If your credit score is in the exceptional or very good range, you will generally be in a strong negotiating position since you’re more likely to qualify for the best rates offered by most lenders. If your score is in the good range, you can generally still secure a solid rate, but you may not always qualify for the lowest interest rates available. If your credit score is in the fair to poor range, you may have more trouble unlocking favorable interest rates.
Knowing your credit score will give you a better idea of the type of interest rate you’re likely to qualify for. This will make it easier for you to evaluate whether a lender is making you a competitive offer. You can use our car refinance calculator to get a sense of what kind of interest rate you may qualify for based on your credit score. Keep in mind that there are other factors that will impact the actual interest rate offered by lenders when you apply for refinancing.
If your credit score isn’t in the very good or exceptional ranges and you can afford to wait a little while before refinancing, you may consider taking some steps to boost your credit score before speaking to lenders. This is especially true if boosting your credit score a few points will place you into a higher range. In these situations, raising your credit score can improve your negotiating power and potentially help you unlock a significantly lower interest rate.
Know Your Budget
When lenders know that you’re unwilling to accept the first offer they make if it doesn’t fit into your budget, they may be more likely to work with you in order to secure your business.
Shop Around for Auto Refinance Rates
Once you know your credit score and your budget, you can start looking into auto refinance rates. If your goal is to negotiate the best possible rate, you should talk to several different lenders to ensure you’re receiving competitive offers. There are several different lender options to choose from. It’s best to get a quote from at least one of each type of lender to see if there is a difference in the interest rates you’ll receive:
- Local and national banks – While many banks will post their loan rates on their website and let you apply online, it’s still a good idea to go into a local branch and speak to a lender in person. This will give you an opportunity to ask questions and explain your refinance goals. There’s a chance you’ll get a better offer this way and at the very least, they will be aware that they will have to compete for your business.
- Credit unions – Credit unions are often a great option for car loan refinance. They generally offer lower fees and interest rates than banks. If you have a credit union in your area, you should speak to a lender in person to ensure they quote you their best possible rates.
- Online banks – Online banks often offer lower interest rates than bank branches, making them an excellent option to consider. While it’s easy to navigate loan applications with online banks, the downside of this option is that you typically won’t receive the same level of personal service that is possible when you can go into a branch and speak to a lender in person.
Before speaking with any potential lender, research their reputation to make sure they’re trustworthy. Look at online reviews to see what other borrowers say about their experience working with this lender, and check their ratings with the Better Business Bureau.
Make Lenders Compete for Your Business
Therefore, you should always let lenders know you’re getting multiple quotes. When you do this, there’s a good chance they’ll come up with a better offer than they initially quoted you. However, don’t instantly accept their improved offer. Once you’ve received the best possible offer from each lender, you can then leverage these to try and get each lender to quote you an even lower rate.
To do this, ask each lender if they will beat the lowest interest rate you received. If a lender really wants your business, they will often find a way to either match or beat this rate. Continue doing this until none of the lenders are willing to continue going lower. At this point, you will know you’ve negotiated the best possible rate you can.
Negotiating with several lenders is time consuming and requires a “stick to your guns” mentality. However, there’s a much easier way to pit lenders against each other to ensure you secure the lowest possible interest rate. When you work with iLending, we handle this negotiating process for you by comparing loan options across our vast network of over 50 nationwide lenders. With such a large number of lenders being consulted during our loan shopping process, you’ll have peace of mind that you’re unlocking the best rate possible for your specific circumstances.
iLending Makes Auto Refinance Easy and Hassle Free
If you’re ready to achieve the financial freedom that often comes with refinancing a car loan, iLending can help. Our exclusive You First Approach™ makes auto refinance easy and hassle free.
One of our loan consultants will work closely with you to learn about your refinancing goals. Then, your loan consultant will negotiate with lenders on your behalf. With a network of over 50 nationwide lenders, we have the ability to leverage the best possible loan options that align with your stated goals. Your loan consultant will review the most competitive options with you and answer any questions you have before recommending the right solution for your specific needs.
Once you choose a loan, our team will do all the work for you. We’ll fill out all necessary paperwork and follow up with your existing lender to ensure your loan is paid off as part of the refinance process. You’ll be able to relax knowing that you got the best possible rate and every step was handled properly.
On average, iLending customers save $143 per month when they refinance with us. This savings can have a huge impact on your life, allowing you to pay down other debts, save extra money each month, or make an important purchase that you otherwise couldn’t afford.
Apply now to get the car loan refinance process started.
What would you do with an extra $132* in your pocket?
