Check out these five auto refinance tips from Ruloans finance experts:
- Think beyond the big banks
Searching for the best car loan refinance rates? Don’t limit yourself to large traditional banks. It’s always a smart idea to check with NBFCs too since their primary goal is to service their clients and not to make a profit.
- Stay calm if you get declined
If you’re declined a personal loan, try to figure out why and see if there’s an action you can take to remedy the situation. Do you have a high balance on one of your credit cards that is negatively impacting your credit score? If so, paying it down could help improve your credit health and chances of being approved in the future. Make sure you use some credit score hacks to maintain a healthy credit score. For credit score hacks get in touch with our finance experts who are on their toes to help you anytime!
- Shop around within a short timeframe
As part of the loan application process, new lenders will examine your credit report—but not all credit checks have the same effect. Some lenders use “soft inquiries,” which usually don’t affect your credit score and don’t show up on credit history, while others use “hard inquiries,” which generally do impact your credit score.
But don’t let concerns about multiple hard inquiries prevent you from shopping around for the best rate. Major credit bureaus don’t want to penalize smart customers for rate shopping, says Credit Sesame.
- Know when to refinance—and when not to
Before spending time and energy shopping for a new auto loan, consider whether refinancing is appropriate for your financial situation.
You might be a good candidate to benefit from refinancing if interest rates have declined, your credit score has improved, or your current loan is from a dealership (where rates are typically higher than from other traditional lenders). Another reason people consider refinancing is to lower average monthly car payments and free up cash flow or save money for other life events, like having a baby or buying a home.
- Don’t fall asleep at the wheel
Once you’ve found a better/lower rate and are nearing the end of the refinancing process, it’s important to stay vigilant about the details. Check the fine print of your current loan (is there a prepayment penalty?) and of your new loan (are there any fees?). These potholes can meaningfully change the math—making a seemingly great deal less appealing.