How To Qualify For An Auto Loan
There will be 3 factors that determine how much your monthly auto loan payments will be; how much you borrow, the interest rate you are offered, and the term of your loan.
The amount you borrow is up to you and the car choice you make. The interest rate is also within your control as long as you are prepared. Most auto lenders will look at your FICO®Score to determine the rate they will offer you.
Buying a New Car
When buying a new car, there are three main factors that will determine your monthly payments: how much money you put down (or trade in), how long of a term you decide upon and your auto loan credit score. Since the rate that you are offered will likely be based on your FICO Score, you should take some time to consider just how much less or more you pay each month because of your FICO Score.
Refinancing an auto loan
Similar to refinancing a mortgage on your home, refinancing an auto loan may enable you to save money. Since the purchase of an automobile is often a one-day transaction, the buyer is less inclined to take the time and effort to shop for loan rates before or during the transaction. As a result, the interest rate on the auto loan you secured, while competitive, may not have been the lowest available to you then and may be higher than what is available now.
If you purchased and financed an automobile recently (in the last 12 months for example), there is a reasonable chance that auto loan refinancing will save you money. That is, as long as interest rates haven’t risen notably and your FICO® Score hasn’t dropped significantly.
Understand that there are fees involved in an auto refinance, just as in a mortgage refinance, so you need to carefully look at all associated costs and terms. You also need to determine if your current auto loan has pre-payment penalties, as that can change the viability of auto loan refinancing.