With hopes of greater economic stability in the coming year, the auto loan industry is also gearing up to see what awaits its fate. However, one thing is for sure; the future of auto refinancing seems brighter than ever. This is especially true given that businesses have already come a long way in adapting to a whole new world.
So, if you’re wondering how to refinance your car loan in 2022, keep reading because we’re about to reveal some of the most crucial aspects of refinancing an auto loan.
Is It Possible For You to Refinance Your Car?
Refinancing a car loan is always possible, of course, under the right personal and financial circumstances. However, you must also keep the lender’s criteria in mind. Despite the diversity in the market, all lenders do tend to have some common requirements, such as:
- A proven source of income
- Sufficient financial flexibility when it comes to handling payments (debt-to-service ratio)
- A legitimate place you call home and where you usually have your mails sent to
- Stable credit history and a high credit score
How Should You Go About the Auto Refinancing Procedure?
Auto refinancing is a pretty straightforward process. More often than not, you’ll need to provide the new lender with the same information as your existing loan application. In addition to the vehicle’s current details, here’s everything you must gather beforehand:
- Tax return information and current pay stub
- Proper identification such as a photo or social security number
- Banking information (as per the lender’s demand)
- Vehicle information (year, model, mileage, trim, and title)
However, in order to ensure you’re able to refinance successfully, you must have a satisfactory credit history. While your credit score is not the only factor at play when it comes to refinancing a car, it does hold precedence over other factors. So, how can you rebuild your score? Here are three ways to start off with:
- Pay your existing bills on time
- Keep your outstanding debt low
- Go slow with credit applications, as a sudden increase in activity tends to leave a negative mark on your credit history.
The Bottom Line
If you’re thinking about refinancing your car in 2022, now is the time to start thinking about building your credit and doing your research. Look for credible banks and credit unions in the market and see what different lenders are offering before you take the next step.