When you apply for auto refinancing, there are a number of requirements that you need to meet in order to convince your lender. These include the mileage of the car, its model, the age of your loan, and your credit score, among other things. Credit score plays an essential role in convincing the lender to accept your application. So what credit score do you need for auto refinance? Read on to find out!
What Credit Score Do You Need for Auto Refinance?
Technically, there is no universal minimum on the credit score you need for auto refinance. All the lenders have different requirements, and there is no such thing as a minimum standard credit score. While some lenders would accept auto refinance applications from people with bad credit, others would reject them.
If your goal is to refinance your car in order to get lower monthly payments by either increasing your loan term or decreasing your interest rates, a good credit score does help. So what really is a ‘good credit score’?
Generally, auto lenders use multiple credit scoring models to measure your credit score. However, most lenders break down the credit scores this way:
- 781-850: Exceptional
- 661-780: Very Good
- 601-660: Good
- 500-600: Fair
- 300-499: Poor
In general, the higher the credit score, the better interest rates you get. If your credit score has improved ever since you signed up for the original loan, then your lender may agree to give you a lower interest rate. Usually, people with a credit score of 660 and above get the best interest rates which are typically 6.64%, or even better.
Other Factors that Influence a Lender’s Decision
Your credit score is not the only thing that’s considered when applying for auto refinance. It also depends on a number of other factors that vary from lender to lender:
When applying for an auto refinance, your car matters. And no, it doesn’t matter whether you are driving a Ford or a BMW. Your car’s actual market value, its value relative to the loan, its model, mileage, and its condition matter more. The newer the model, the better your chances of getting an auto loan refinanced.
The Last Time You Applied for Auto Refinancing
When was the last time you applied for auto refinance? Although there is no limit to how many times you can refinance your car, it does impact your credit score. If you have been refinancing your car repeatedly in the past, then it may influence your lender’s decision.
So that’s all, folks! What credit score you need for auto refinance varies from lender to lender. However, a credit score of 660 and above is considered to be a really good credit score for most lenders even to get a business loan.