Auto Loan Refinance Requirements | Auto Express Credit
Regardless of your credit score, you must meet all lender requirements if you hope to refinance your car. Although each lender has their own specifics, there are generally a few requirements you should expect when refinancing an existing car loan.
What are the refinancing conditions? To refinance your car and replace your current car loan with another, you, your vehicle and your loan must follow certain guidelines according to your lender. Most borrowers refinance with a new lender, but you can also check with your current lender.
- Good or improved credit score. Having good credit, a FICO score of around 670 or better, is required in many cases. However, if you have taken out a subprime auto loan, you may be considered if your credit score has improved.
- Be current on your loan. Most lenders require your loan to be current and in good standing with an on-time payment history. Your loan must be at least one year old and not too close to repayment.
- Acceptable loan amount. Lenders each have their own rules about what is an acceptable loan amount. Generally, if you still owe too much or are about to finish your loan, you may not be able to refinance.
- No negative equity. Your vehicle must have equity or at least break even, which means you can’t be underwater on your loan if you want to refinance.
- Vehicle age and mileage. Your car must be within the lender’s range for acceptable age and mileage. These vary by lender, but most prefer to refinance vehicles in good condition.
How does car refinancing work? The goal here is usually to get a smaller monthly payment. To do this, you must either qualify for a longer loan term or a lower interest rate. The lower interest rate is usually the best choice because it lowers your payments and the overall cost of financing. It’s more common for borrowers to refinance with a new lender, but you can check with your existing lender to see if they can help lower your rates.
If you think you qualify for refinancing your car and are looking for a place to start, let us help you. Auto Express Credit works with an extensive network of providers able to meet your refinancing needs. Simply fill out our quick and free auto loan refinance application form to get started!