Do you know the 5 common eligibility factors that lenders consider for auto loan refinancing?
Have you given much thought to your auto loan since you signed on the dotted line? Even if the loan was a great fit for you then, it may not be as good as what you could qualify for now. Fortunately, you may be able to adjust your interest rate or monthly payments by refinancing your loan, replacing your old loan with one that better fits your needs. Learn what lenders look at when considering you for an auto loan refinance, and see if you have what it takes to qualify.
Current Loan Information
You’ll need to know a few basic facts about your existing loan, such as your current balance, monthly payment amount, time left on the loan and the annual percentage rate, or APR. Having your loan servicing number on-hand can aid the process, so the lender can easily look up your loan.
Value of Your Vehicle
A lender may not approve you for a refinance unless you meet a certain loan-to-value ratio, or LTV. The LTV is the loan amount divided by the appraised value of your car. Check if you’ll meet this requirement by finding the value of your car on NADAguides.
Your credit can affect the refinance APR you’re offered. Before applying for any loan, it’s generally wise to check your credit score as it’s a standard factor that most lenders will consider, even if you’re refinancing a loan you already have. If your credit score has improved since you first applied for a loan, you can expect your loan refinance rate to improve in turn. Fortunately, if you’ve been making your car loan payments on time and you haven’t taken on any new debt, then your credit has probably improved. But if it hasn’t, then you may be better off trying to improve it before refinancing.
Other Outstanding Debt
The lender will typically want to know what other debts you have, such as credit cards, student loans or a home loan. This will provide context on how much debt you’re currently juggling and if there’s a chance you could fall behind on your refinance loan.
Trade for a Better Loan
Don’t be stuck with an auto loan that has a high rate or a payment plan you aren’t comfortable with. At Navy Federal Credit Union, we put members’ needs first, offering auto loan refinances with low rates and low monthly payments. It’s easy to apply on our mobile app*, online, at a branch or by calling us at 1-888-842-6328.