If you have made your payments on time, there is a good chance you can refinance your car after two years. Making car payments on time can help improve your chances for refinancing your car. However, it is important to remember that there are other factors a prospective lender will consider before refinancing. Here's what you need to know to see if you are a good candidate to refinance your car.
Your Credit Score
There are 5 major factors that make up your credit score. These include credit history, how much is owed, length of credit history, new credit and types of credit. If you worked on each of these areas and faithfully made your car payments, it would increase your chances to refinance your car.
Paying your other bills on time will also help your chances of refinancing your car. Next take a look at your credit cards with outstanding balances and pay off as many as you can. This shows the potential lender that you are being responsible and managing your debt. And, if you refrained from requesting new credit or opening new accounts, your chances of refinancing an auto loan will improve.
A Person's Stability
The lender will want to assure you have held the same job for the 2 years of your original car loan. Be prepared to show recent check stubs as proof that you are with the same employer. If you have received a raise within the last 2 years, bring a check stub from 2 years ago along with the most current check stub. Be sure and point this out to the lender. Bring the employers name and phone number with you.
Another thing banks will consider is a consistent address. If your residency has not changed in 2 years you will want to bring proof that this is true. It is suggested to bring a current utility bill to show the lender that your address is the same as it was on the original 2 years ago.
Other Considerations Before Refinancing Your Car
It is a good idea to get the pay-off amount from your current loan. You can get this figure from either your statement or by making a phone call to the bank that holds the loan.
Next, research the current value of the car. You can use Kelley Blue Book, the NADA guide or the Black Book to get a realistic picture of what your car is worth. You can use all three of these guides to get an average value for your vehicle.
Before making the final decision to refinance your car, you want to know that the car is still worth the amount to be financed. This will avoid an upside down car loan. If you feel you could end up being upside down, determine whether a down payment for the refinance is a feasible option.
If a substantial amount is needed in a down payment to avoid creating negative debt, you may want to reconsider refinancing the car.
By Mike Reitz
Your Credit Score
There are 5 major factors that make up your credit score. These include credit history, how much is owed, length of credit history, new credit and types of credit. If you worked on each of these areas and faithfully made your car payments, it would increase your chances to refinance your car.
Paying your other bills on time will also help your chances of refinancing your car. Next take a look at your credit cards with outstanding balances and pay off as many as you can. This shows the potential lender that you are being responsible and managing your debt. And, if you refrained from requesting new credit or opening new accounts, your chances of refinancing an auto loan will improve.
A Person's Stability
The lender will want to assure you have held the same job for the 2 years of your original car loan. Be prepared to show recent check stubs as proof that you are with the same employer. If you have received a raise within the last 2 years, bring a check stub from 2 years ago along with the most current check stub. Be sure and point this out to the lender. Bring the employers name and phone number with you.
Another thing banks will consider is a consistent address. If your residency has not changed in 2 years you will want to bring proof that this is true. It is suggested to bring a current utility bill to show the lender that your address is the same as it was on the original 2 years ago.
Other Considerations Before Refinancing Your Car
It is a good idea to get the pay-off amount from your current loan. You can get this figure from either your statement or by making a phone call to the bank that holds the loan.
Next, research the current value of the car. You can use Kelley Blue Book, the NADA guide or the Black Book to get a realistic picture of what your car is worth. You can use all three of these guides to get an average value for your vehicle.
Before making the final decision to refinance your car, you want to know that the car is still worth the amount to be financed. This will avoid an upside down car loan. If you feel you could end up being upside down, determine whether a down payment for the refinance is a feasible option.
If a substantial amount is needed in a down payment to avoid creating negative debt, you may want to reconsider refinancing the car.
By Mike Reitz
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