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The Benefits of Refinancing Your Auto Loan

 

While the term ‘refinancing’ might inspire the dread of excessive paperwork, awkward meetings, and stress, refinancing your auto loan is actually a much faster and easier process than you may imagine. There is usually no need for an in-person appraisal and very little or no charges to consider, making this less daunting than it might appear to be at first.

 

There are a number of reasons you may be considering refinancing your car loan, including:

 

• Financial challenges: your personal finances may have begun to worsen since you first took out your auto loan. Perhaps you’re now given fewer hours at work, have a new baby to prepare for, or simply have more debts accruing than you did at the time. Monetary strain can cause severe stress and affect your quality of life in an extremely negative way.

 

• Your credit score is holding you back: your credit score will suffer if you struggle to pay your debts, and may prevent you from taking out loans or securing a mortgage. Your rating may have already been low when you first took out your loan, or it might have been blank entirely if you were a first-time driver. Boosting your credit score is incredibly important to get a mortgage and access other forms of financing in the future.

 

• You feel you can get a better rate: your lender might not have been able to give you the best interest rate or payment plan possible, or maybe they did, but you feel that you can get a lower one today.

 

Regardless of the reasons motivating you, refinancing your auto loan could be a powerful solution to improve your personal circumstances. Here are the key benefits.

 

Set-Up Lower Payments by Extending the Payment Length

Perhaps the biggest benefit of refinancing your auto loan is securing lower monthly payments by extending the length of the payment itself. Adding an extra year (or two, or three) to your car loan will take the regular repayments down to a level that you can manage with greater ease. This can reduce the strain on your finances overall, allowing this debt to fit in with your others in a more practical way.

 

Of course, you will be agreeing to a contract for a longer period of time, which you may not feel is ideal, but the important thing is arranging payments that can fit more realistically within your budget, whatever that may be. If you find yourself with a shorter loan, then yes, you would be rid of the debt sooner, but the monthly payments would be higher, possibly at a level you simply could not manage. A lender may be able to arrange a deal that leaves you with more disposable money each month to improve your quality of life, while still helping you hit your payment goals. If you can use this extra money to pay off other debts, you can begin to focus more on clearing your car loan sooner rather than later too.

 

Boost Your Credit Rating

Poor credit scores are a source of frustration for countless Americans trying to secure a loan from a bank or car dealership. Some missed payments on open loans, too many loan applications within a short period, or being unable to meet deadlines altogether can cause your credit score to drop over time. However, a car dealership may be willing to provide you with an auto loan regardless of your bad credit history, and trust you to make repayments just as they would a customer with a better rating. Still, if you find yourself struggling to make the payments on your current loan, you run the risk of your credit score dropping again. Refinancing your loan to accommodate payments you are able to manage better reduces the chances of you missing them. The longer you can keep making payments on time, and in full, the better your credit rating can become by the time the loan is paid off. As a result, you may be a better candidate for other loans and finance plans in the future.

 

Reduce Your Interest Rate

This is one of the most compelling reasons to consider refinancing your auto loan. It was mentioned earlier about reducing your regular payments by extending your loan through refinancing, and a lower interest rate takes this even further. Lower interest rates can turn a good deal into a great one, leaving you with less stress and a reduced sense of urgency. Feeling as if you need to pay a loan off as soon as you possibly can to avoid interest can make being in debt more difficult, but if your lender lets you reduce your rate, it becomes much easier to manage.

 

If your credit rating was low before you took out your auto loan, or you had zero credit in the first place, making regular timely payments may have resulted in an improved score. The longer the gap between your first signing on the dotted line and refinancing, the more chance you have to boost your credit score. Lower interest rates may be available if overall rates have dropped since you first took your auto loan out. With a stronger credit rating behind you, you may qualify for a reduced interest rate, and be able to pay it off faster, while saving on the total amount repaid.

 

Take Advantage of Changes in Lender’s Deal

Your lender may well have changed how they handle auto loans since you first agreed to your current financing arrangements. For example, they may have come under new ownership and prefer to keep interest rates lower on loans, or offer longer contracts as a standard policy to keep monthly payments at a lower level.  

 

At Citi Auto Group, we’re dedicated to helping customers get an auto loan that fits your budget and lifestyle, no matter what your credit score! Give us a call or drop in and we’ll be happy to answer any questions you may have about refinancing your car loan, or finding a new vehicle that meets your current needs.

 

Our special credit financing program enables us to offer our customers instant credit approval on a number of financing options, and our inventory includes a large selection of  high-quality pre-owned cars and trucks. We are located at 4160 Torresdale Avenue, and our phone number is 215-744-6901.

 

 

How to Improve Your Credit Score

 

You’ve decided to purchase a used car. That’s great. Most people rely on credit and loans if they want to buy a vehicle, and you probably won’t be any different. After all, cars can be expensive and there aren’t many people that can pay the entire vehicle cost up front. So, before you start looking for a vehicle, you should take a good look at your financial situation. If you’re credit score is not good, and you’re obviously not able to buy a car outright, you also may not be able to get the needed car loan to finance your purchase.

 

Even if you are currently in a financial position where you can make reasonable monthly payments, many lenders will simply look at your credit score to decide whether to approve you for a car loan. If you haven’t been good at managing your finances in the past (paying bills late, being in debt or taking out loans that you couldn’t pay back), the lenders may feel you will have a hard time managing your finances in the future. To help you out, here are a couple of ways to improve your credit score.

 

Get A Professional Credit Report

The first thing you’re going to need is a professional credit report so you can see exactly what your current score is. You might find that you already have a good, or at least fair, credit score, and that might be all you need to successfully get approved for a car loan. However, if you credit score comes up with a poor or bad indication, then you can at least see what has caused it and determine how you can improve it yourself, or maybe get some assistance from professionals.

 

There are three major credit report companies out there, TransUnion, Equifax, and Experian, and you are entitled by law to get a free credit report every 12 months from each of them. Pick one, or get a report from each and compare them. The first thing you want to look for are errors. It is quite possible that sometime in the past one of your creditors accidently posted an incorrect to one of the credit agencies, or a negative report that long been rectified still shows up. These are thing that can be taken care of by sending a letter to the agency, or agencies, explaining the situation and provided documentation to support your claim. You may have to go back to the original credit to get the proof, but it will be worth the time and effort to get your report corrected.

 

Payment Reminders Can Help Keep Your Record Clean

We’re all forgetful, which is why we have alarms to wake us up in the morning and kitchen timers to ensure we don’t burn our cooking. Since we rely on timers for everyday things, why not rely on alerts to remind you to pay your bills? If you find yourself constantly paying your bills late, then one of the easiest remedies is to set up payment reminders on your cell phone.

 

Lenders like seeing someone that has paid their bills on time. It goes a long way to improving your credit score and it helps when you actually apply for a loan. Whether it’s paying the rent, utility bills or paying off credit card balances, set up reminders so you’re never late on any of them. There are many free smartphone apps that can help remind you when you need to pay, and you can also sign up to have some of your creditors notify you a few days before a payment is required. If you have late payments, then make sure they don’t impact you for too long by quickly dealing with them. Stay on top of your finances and ensure that your past credit problems don’t creep back, because it can have a massive negative effect on your chances of borrowing money for anything.

 

Keep Credit Balances Low

Another good tip is to keep credit balances low. Sure, credit is made to be used, but if you’re constantly using credit cards and your balances are always at the upper limit, lenders might feel like you’re trying to live a lifestyle you can’t afford. Be modest with your uses of credit. Keep the balances low and try to pay them off as soon as possible. However, if you have the cash available for a particular item, you might still put it on a credit card as long as you use that money to pay it off as soon as the bill comes in.

 

High amounts of credit can also contribute to delayed payments if you’re not careful. Manage your money responsibly by juggling the cards you have and using them in the correct places. Fixing your credit score is a lot about your attitude towards spending, so if you find that you have a bad habit of buying random items that you don’t need, try and keep your expenses to a minimum and thus keeping your credit balances low.

 

Consider Getting a Pre-Paid or a Bad-Credit Credit Card

If you’re having a hard time maintaining a good credit history, consider getting a Pre-Paid credit card. These are made for the main purpose of not building up credit card balances, and can be a good means to improving one’s credit score. Even if you don’t have a bank account, most banks make these cards available to anyone.

 

Another option is Bad-Credit credit cards that many credit cards companies offer. The credit limits on these cards are relatively low so they’re worth using for everyday purchases, which will enable you to slowly improve your credit rating by demonstrating you are now able to handle your finances. It’s worth mentioning that bad-credit cards typically have higher interest rates than regular credit cards, which makes it important to pay off the balance every month.

 

If your existing credit balances are so high that you are unable to even make all the minimum amounts, you may be looking to use one of the many credit repair companies that constantly run radio and television ads. In many instances you may be able to do yourself the same things they would do for you, without having to pay the fees they charge. The FTC (Federal Trade Commission) offers some very good advice and information on what you can do yourself, and how to find legitimate, non-profit credit counselors if you are unable to do it yourself.

 

Some Final Words

Following these methods can get you on track to improving your credit score, but please understand it will not happen overnight. While that may be fine for those who don’t need a loan to make a large purchase right now, what about those that do need to buy a new car immediately? Does your vehicle need costly repairs that you can’t afford, or has it been totaled in an accident and the insurance payment isn’t nearly enough to buy an adequate replacement? Citi Auto Group can be your answer.

 

At Citi Auto Group, our professional staff will help you pick the right vehicle from our large inventory, with the right price, and financing to make that happen. No matter what your financial situation, we can get you approved for a car loan that you can afford. In addition to our strong relationships with some of the biggest auto lenders, we can help you find bad-credit loans, and can also offer a Buy Here Pay Here option.