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Even borrowers in states with the worst credit scores saved by refinancing their auto loan.
By refinancing your auto loan, you might be able to save some money each month. You can put this extra cash toward debt, savings, and other financial goals. You may be surprised to learn that a high credit score doesn’t automatically mean you’ll enjoy higher savings when you refinance. On the other hand, having a lower credit score doesn’t automatically disqualify you from being able to save big by refinancing.
Therefore, it’s a good idea to explore refinancing no matter where you stand credit wise. Even if you don’t have the best credit, you can still lock in a refinance offer that helps your financial situation.
To give you an idea of how your credit may impact your auto loan refinance, RateGenius compiled the State of Auto Refinance: 2022 Report. In it, you can find the states with the best and worst average credit scores, as well as how much their residents saved through refinancing.
When you refinance your car, you replace your current auto loan with a new one. The new loan pays off your original loan. Then, you begin to make monthly payments on the new loan. If you do pursue an auto loan refinance, you might lock in a lower interest rate and lower your monthly payment. You can also switch to a different lender with special discounts or better customer service.
Each lender has their own unique criteria for auto loan refinancing. In most cases, however, lenders will consider factors such as your vehicle make and model, credit score, loan-to-value ratio, and debt-to-income ratio. The economy in your state, competition, and local lending laws — all which are outside of your control — can also play a role in the refinancing offers you receive.
A high credit score can make it easier for you to get approved for low rates when you apply for refinancing. This is because strong credit shows you’re a responsible borrower and likely to repay your loan.
But if you don’t have a high credit score, don’t worry. Some lenders may be willing to give you a refinance offer that still saves you money. In most cases, lenders will look at your FICO score, which can range from 300 to 850. Here’s what the score ranges mean.
These states have the highest average credit scores in the nation.
Here are the states with the worst average credit scores.
In 2021, more than half of all borrowers we surveyed (56%) saved between $50 and $149 a month on their car loan payments. No matter what your credit score is, an auto refinance has the potential to make your car loan more affordable.
But if you don’t have the best credit and want to increase your chances of saving as much money as possible, be sure to pay all your bills on time and reduce your credit utilization before you apply. When you’re ready to refinance, shop around to find a great deal.
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