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Can You Refinance Your Car the Same Day You Buy It?

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In a few fringe cases, it’s possible to refinance your vehicle immediately after purchase. However, if you don’t fall under a special case, then you have to wait. Here’s what we know about refinancing requirements on auto loans.

Can I Refinance My Car Right Away?

Can You Refinance Your Car the Same Day You Buy It?If you have great or near-perfect credit, you may be able to qualify for refinancing soon after, or the same day, as you purchased a vehicle.

It’s possible that your loan contract has a prepayment penalty in it if you complete the loan before its scheduled due date, but those aren’t so common anymore. We recommended contacting your lender and reading through your loan contract to double-check if there are prepayment fees for paying off your loan early.

However, if your credit score is worse for wear, you may have to wait to refinance your car until you’ve had the loan for at least 12 months.

Many refinancing lenders require that your credit score has improved during your current loan term or that you have good credit, and that you’ve maintained a good payment history for one year. If your credit history hasn’t been great historically, then a refinancing lender may require that you keep your loan as is until you’ve proven your ability to repay it.

Requirements of Car Refinancing

Refinancing lenders, as a general rule, want to refinance a car for its actual value. Remember that refinancing involves paying off your original loan to replace it with another one, and a lender may not want to pay out more than it’s worth.

Refinancing lenders don’t usually just rely on your credit score to see if you qualify. Other typical refinancing requirements include:

  • Your vehicle is less than 10 years old
  • The car has less than 100,000 miles on it
  • The vehicle has equity (car is worth more than the loan balance)

Even if you have the credit score to refinance your car soon after driving it off a dealer’s lot, you may not qualify if the vehicle doesn’t have equity. Many brand new vehicles experience rapid depreciation (loss of value) in the first few years of ownership – which could make the loan balance higher than its value.

If your vehicle doesn’t have equity and your credit score isn’t great, then refinancing may not be an option right away. To increase your odds of qualifying for refinancing, it may be worth it to pay down your loan as quickly as you can to get into an equity position, and make all your car payments on time to improve your credit score.

How to Refinance the Right Way

Most borrowers that refinance are looking to get a lower car payment. The majority of others are looking to reduce their interest rate. Refinancing can be a great way for borrowers to save money on their car loan – both monthly and long term.

However, you may have the option of just extending your loan term to get a lower payment, but be advised, this means paying more for the vehicle.

Nearly every auto loan out there today uses a simple interest formula. This means your loan’s balance and interest rate determine how much interest you pay the lender over time. Simple interest means your interest charges accrue daily, and the higher your loan balance and longer your term, the more you pay.

If you’re looking to save your car loan, then trying for a lower interest rate is the way to go instead of just extending your loan term.

On the Lookout for Auto Finance Resources?

Here at Auto Credit Express, we want to assist bad credit borrowers in everything auto finance. If you’re in need of refinancing connections, visit our resource center.

If refinancing isn’t an option for you right now, then it may be time to explore other auto loan options. Over the last 20 years, we’ve created a nationwide network of special finance dealerships that assist borrowers with credit challenges. Complete our free auto loan request form and we’ll look for a dealer in your local area at no cost and no obligation.

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How Does a Secured Credit Card Work? | Credit Card News & Advice

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Building credit from scratch is often referred to as a chicken-or-the-egg problem. If you don’t have a credit history, it can be challenging to get approved for a credit card. But if you don’t have a credit card, it’s hard to build a credit history.

Here’s where secured credit cards can save the day. It’s possible to be turned down for a secured credit card, but if you’re approved for one, it’s a good way to get started on your journey to great credit.

We’ll start with the basics and work our way up to the advantages – and disadvantages – of secured credit cards.

There are both unsecured and secured credit cards. An unsecured credit card doesn’t require a deposit to get approved for the card. The top unsecured credit cards from major issuers are typically used by those who have at least fair credit. There are some unsecured credit cards available for those with zero or bad credit, but they tend to have high interest rates and fees.

Due to the cost of unsecured cards that target those with little or bad credit, many turn to secured credit cards. Secured credit cards do require a deposit, usually ranging from $200 to several thousand dollars, depending on the deposit requirements of the issuer.

The deposit stays in an account, and the purpose of the deposit is to decrease the risk for the lender. If you don’t pay for the purchases you made with your secured credit card, the financial institution will use your deposit to pay it off.

When you get approved for a secured credit card, you’ll receive a credit card that looks just like an unsecured credit card. There’s no visible clue that the card is secured.

The amount of your security deposit is usually equal to the credit limit for your new secured card. You’ll use your secured credit card just like you would an unsecured card. You can use it for purchases everywhere that accepts your secured credit card.

Just to be clear, your security deposit stays in an account with the issuer. You’ll make payments on your balance from one of your own bank accounts. So, you’re actually buying things on credit.

Most secured credit card issuers report your payment history to the three major credit bureaus: Equifax, TransUnion and Experian. If you can’t find confirmation on the card’s home page that payment history is reported, call the issuer to make sure it’s the policy.

When your secured card’s bill comes, you must pay the bill by the due date. If you pay your balance in full, you’ll avoid paying compound interest. If you consistently make on-time payments and keep low balances on your card during the month, your credit score will begin to increase.

Secured credit cards have many advantages, but there are also downsides to this type of credit card.

  • Secured credit cards help you build credit and develop a good credit score.
  • Secured cards help you learn how credit works. And since the credit limits are on the low side, it helps to minimize your risk of getting into debt.
  • Some credit card issuers will promote you to an unsecured credit card. Not all secured card issuers have unsecured versions, but many of them do.
  • When you’ve built a good credit history and you’re ready to upgrade to an unsecured card, you can get a refund of your deposit.
  • Many secured credit cards offer rewards and benefits.

  • You have to make a security deposit, and this ties up your money for the life of the secured card.
  • Some secured cards have many fees, so you have to read the fine print carefully.
  • You’ll probably have a low credit limit, but this is often a good thing while you’re getting comfortable using credit.
  • Some secured credit card issuers don’t offer unsecured versions, which means you have to apply for an unsecured card from another issuer.

I know it’s difficult to build credit or to come back from a poor credit score. A secured credit card can be a great option, but be sure you read all the disclosure statements and understand if there are fees involved. After about a year of responsible use, you’ll probably have at least a fair FICO score (580-669), which is good enough to make the leap to an unsecured credit card.

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Review: Bank of America® Customized Cash Rewards Credit Card for Students

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Now that most students are starting to return to in-person school, many young adults and their parents are once again looking for the right credit card. Having a credit card offers students a secure and convenient method of payment. It also helps students build credit and even earn some rewards. The Bank of America® Customized Cash Rewards Credit Card for Students excels at all of these tasks.

Key Terms

  • Welcome Bonus: Earn $200 cash rewards after spending $1,000 within 90 days of account opening.
  • Rewards: Earn 3% cash back in the category of your choice including gas, online shopping, dining, travel, drug stores, or home improvement/furnishings. Receive 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases.
  • Annual Fee: None
  • APR: 13.99% to 23.99%
  • Promotional Financing Offer: 15 months of 0% APR on both new purchases and balance transfers.

How This Card Works

This card is a very competitive rewards card, especially for a student card. New applicants earn $200 in cash back after making $1,000 worth of new purchases within 90 days of account opening. You also earn 3% cash back in the category of your choice including gas, online shopping, dining, travel, drug stores, or home improvement/furnishings. Additionally, you earn 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases.

But rewards shouldn’t be the most important thing to students. Instead, consider this card because it’s very easy for Bank of America customers to manage, along with their checking and savings accounts. It also helps students to build their credit by offering them a free FICO score each month. It’s compatible with digital wallet technology and can be managed by a full featured mobile app.

New accounts also receive 15 months of 0% APR financing on both new purchases and balance transfers, and there’s no annual fee for this card.

Advantages

While most student credit cards are very basic, this one comes with generous rewards, including a new account bonus. Other advantages are its promotional financing offer and free monthly FICO score. There’s no annual fee for this card, but that’s expected with a product designed for students.