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Does Refinancing a Car Hurt Your Credit All You Need To Know

Auto refinancing can be a great way to save money on auto loan payments. But is it worth it and will it hurt your credit score?<br>

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Does Refinancing a Car Hurt Your Credit All You Need To Know

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  1. Does Refinancing a Car Hurt Your Credit: All You Need To Know

  2. How does car refinancing work? Auto loan refinancing means taking out a new loan to pay off the remaining portion of your current auto loan. The new, refinanced loan will have better terms and conditions – like lower interest rates, lower monthly payments, or a longer loan term. When your new loan is approved, the refinance lender will pay your previous lender the payoff amount and transfer the lien (right to possess the vehicle in case of default) to itself. If done right, auto loan refinancing can help you save hundreds of dollars over the course of the loan.

  3. How much can refinancing save you? On average, auto loan refinancing can get you up to 2.4% lower interest rates and up to 84-month loan terms. If you choose the right mix of interest rates and loan terms, you can save as much as $2000 annually. Remember that having a longer loan term can lead to higher interest charges over the course of the loan. It’s best to use an online auto loan refinance calculator to find out the best terms for your budget.

  4. When is the best time to apply for car loan refinancing? When you want to change your current deal If your credit score has risen If you want to change the loan term When interest rates are low If you want cash in hand

  5. Is there a downside to refinancing a car? Often, refinancing a car can give short-term benefits like lower monthly payments, but you may lose money in the long run unless you’re careful. For example, each lender charges titles fees, origination fees, and other processing fees during your refinancing process. These may add up to more than the savings from refinancing.

  6. Does refinancing a car hurt your credit? The short answer is yes – refinancing a car can hurt your credit temporarily. However, you can easily bounce back and build your credit by staying on track with your monthly payments and keeping an eye on your other dues.

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