Refinancing your car loan allows you to take out a new loan on your existing one. It is the best way to save money and get lower monthly payments if you cannot afford them anymore.
However, there are several factors that affect your auto loan refinancing. Your credit score, the value of your vehicle, and the loan amount are among the factors that impact your ability to qualify for auto loan refinancing. But does mileage matter when refinancing your car?
Does Mileage Matter When Refinancing a Car?
When it comes to refinancing your car loan, the mileage on your car does play a role. Most lenders have a maximum mileage requirement when you are applying for auto loan refinancing.
For instance, at Bank of America, the cutoff is less than 125,000 miles for auto loan refinancing. On the other hand, some other lenders may offer you a cutoff of 140,000 miles.
However, that’s not the only thing that affects your ability to qualify for auto loan refinancing. Continue reading to learn about other factors that come into play.
Other Factors That Matter When Refinancing a Car
1. The Vehicle’s Value
If your car’s value is less than the amount you owe on your loan, then you are upside down on your auto loan. Although you may still get your loan refinanced, the chances of that happening are slim, and the lender may ask you to pay the difference between your car’s value and the amount you owe.
2. The Loan Amount
Most lenders have a minimum requirement for auto loans (e.g., $5,000), and some may even ask you to refinance the entire loan.
3. The Vehicle’s Age
If your vehicle is more than seven years old, you may have difficulty finding a lender willing to refinance. This is due to the depreciation over time that results in your vehicles losing value. Bank of America has a maximum age limit of 10 years on vehicles.
4. The Vehicle Type
Most lenders do not refinance commercial, delivery, and recreational vehicles. However, you can still find a few who would be willing to refinance your loan for these vehicle types. You’ll just have a hard time finding one who is willing.
5. The Credit Score
Your credit score plays a big role in determining whether or not you will get your refinancing application approved. If you have a lower credit score as compared to when you took out the original loan, your lender will hesitate to approve your refinancing application as your financial situation has only deteriorated.
Final Thoughts
Now that you know how mileage matters when refinancing your car, check what the current mileage is on your vehicle, and if it is less than 140,000, you have a shot at refinancing your car loan. Good luck!