If you had bad credit at the start of a car loan, your credit score has to have improved and around at least a year needs to have passed in order to refinance it. There are many lenders around Seattle that can refinance your auto loan, but which one should you pick? Understanding the steps involved and your specific situation can help you decide where to refinance your car loan in Seattle.
Auto Refinancing Steps
Seattle isn’t a cheap city to live in, so when the opportunity comes up to save money on big ticket items like a vehicle, you should take it. Bad credit car buyers in Seattle tend to receive higher than average interest rates, which increases the overall cost of a loan. When you refinance, you can either extend the loan term to lower the monthly payment, or try to qualify for a lower interest rate, which saves money on interest charges in addition to lowering the monthly payment.
In order to get the best refinancing deal possible, you should follow these two steps:
- Check your credit – You need to find out if your credit score is better than it was when you originally took out the loan. FICO is the most common scoring model lenders look at. See if your bank, credit union, or credit card provider offers you access to your FICO credit score. If not, you may have to pay a fee to get it directly from FICO. You can also request a free copy of your credit reports every 12 months from the three major credit bureaus – Experian, Equifax, and TransUnion – by visiting www.annualcreditreport.com. Look for negative information that's inaccurate that you can dispute and have removed, as this can provide a credit score boost.
- Rate shop – The second step is to rate shop in order to find a lender. Rate shopping is when you apply with multiple different lenders in order to compare deals and find the one that can offer you the best terms. You can stick with your current lender, but it's smart to shop around with different ones. Make sure you do this within a given time frame, usually 14 days, to avoid multiple hard inquires on your credit report.
When to Refinance a Car Loan
Now that you know what you need to do, is there a right time to refinance? There certainly is, and if you say yes to any of these three questions, now may be the time to consider auto refinancing:
- Has your credit improved since taking out the original loan?
- Has at least one year has passed since taking out the loan?
- Do you need a more affordable monthly payment?
As we mentioned before, refinancing helps make a car loan more affordable. The best way to do this is to qualify for a better interest rate, since you reduce the monthly payment and the total interest charges.
But, wait, is there a bad time to consider refinancing? Yes, there is. In addition to not having better credit credit, having negative equity – owing more on the loan than the vehicle is worth – hinders your chances of refinancing. Lenders typically require cars to have equity and turn down borrowers that are upside down in their loans.
The Bottom Line
Refinancing your current auto loan is a great way to make the overall cost more affordable. However, you need to let your credit score improve, and wait at least a year if you want the best chances of getting approved for refinancing in Seattle. Our secure refinance request form can help you if you're looking to refinancing your existing car loan.
If you have bad credit and need a loan, we can also help you get connected to a local dealership that has the lending resources you need. At Auto Credit Express, we’ve been helping bad credit consumers find financing for over 20 years. Fill out our free, no-obligation auto loan request form, and we’ll get right to work matching you to a local dealer.