Factors Taken Into Consideration for a Car Loan Refinance

The economy is on a steady incline, but it is still not where it was before the recession started in 2007, and because of this many people are left looking for an auto loan refinance to help lower their monthly payment. Unfortunately, a lot of these people don't know what factors are taken into consideration when a lender is considering a refinance loan.

Two Most Important Factors to Refinance

The first and biggest thing looked at by a lender is credit score. If you received an auto loan with bad credit you want to make sure that your credit is in better shape now. If your FICO score is still low or lower than when your original loan was granted to you your refinance rates will be high, or you may be turned away.

The second factor is your income. With most car loans there is a predetermined income level required. If you do not make the minimum requirements then you should consider getting a cosigner. Remember, different lenders have different requirements and by applying online to multiple lenders you are increasing your chances at being approved.

While these are not the only things looked at by a refinancing loan officer they are the most important, and should be your biggest concern. If your credit score has stayed the same, or is lower, than on your original loan or your income has dropped then refinancing may not make sense for you. In that case, you should try talking to your current lender and see if they are willing to work out a deal with you to help make your payments more affordable without a refinance.

In closing, if your credit score is higher than it was when you were granted your current car loan and your income is better, or at least has not dropped, then refinancing could be right for you. Apply online today to see if you prequalify, and you could be on your way to savings in no time!