Most people consider car refinancing when they want to modify their existing loan tenure. Increasing the tenure means you have the ability to pay over a longer period, but the objective is always to decrease the tenure.
If you’re wondering about the best time to refinance your car, the answer is right when you are eligible for it. We’ll dive into the criterion to qualify for an auto refinance in this blog. When it comes to eligibility, here is what a lender considers:
You Have Made Timely Payments on the Current Loan
No lender would like to give a loan to a person who has defaulted on their loan payments. If you have been a defaulter, it’s unlikely that you will find a lender to refinance your auto loan.
The Elephant in the Room, Your Credit Score
A good credit score indicates good financial health. Your success as an applicant depends on this factor the most. However, don’t worry if your score isn’t the best because most lenders want to see an improvement compared to the score you had earlier.
The Car’s Worth
Your car’s condition is an important factor a typical lender would consider. The two things that matter the most in terms of car maintenance are:
- The age – How old is it?
- The mileage
What Documents Do You Require?
If you are approaching a bank for an auto refinance, they will ask you for the following set of documents. However, keep in mind that the requirements may differ from bank to bank.
- A proof of identity and address: Here, you should provide your identity proof, such as your social security card and the general identity card. You can also present your passport for further assistance.
- Bank statement: Your bank statement shows how well equipped you are to repay a loan. The standard procedure is to ask for up to 12 months of your statements.
- Car insurance proof: You must show all the required documentation for your car insurance.
- Current loan details: This is the most basic requirement every lender will ask you for a car refinance. You must show the existing outstanding balance and the terms of your current loan.
- Car information: Here, the lender will ask you to provide your car details, such as the year of production, current mileage, model number, and any past accidents.