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If you're thinking about refinancing your vehicle, you might come across the term “LTV” or “loan-to-value”. The loan to value ratio is one of the most important parts of a new car loan – or refinance. After all, the refinance process is basically applying for a new auto loan with another lender. You’re taking out a brand new car loan for the same vehicle, paying off your existing loan with the new loan, and lowering or stopping your existing monthly payment. People do this to get a more favorable interest rate or to lower how much they’re paying per month (or both). So when you think about refinancing, you’re really thinking about getting a new loan.All that out of the way, let’s talk about LTV.Loan-to-value is a concept many people don't grasp, but understanding your LTV and how it affects your loan or refinance is crucial if you want to avoid any surprises when getting into debt for your new, or not so new, car. And the same applies for your truck, SUV, or, yes – even motorcycle.So, what exactly is a loan to value on a car? Lucky for you, we’re here to help.Here are all your answers to the most common questions about Loan-to-Value on a car loan.What is a loan-to-value (LTV) ratio in an auto loan?The LTV is, essentially, the percentage of your car's value that you are borrowing from a lender. For example, if your loan is $30,000 and your car is worth $30,000, your LTV is 100%.In short, the loan-to-value ratio, or LTV, is the monetary value of your loan divided by what’s called the “actual cash value,” or ACV, of your car. So you’ll usually see your loan-to-value listed as a percentage. The higher the percentage goes, the more risk there is for you as an individual and for your lender, so a lower LTV is generally better than a high one.How do you calculate the loan to value on a car?To calculate your loan-to-value ratio (LTV), divide the total dollar value of your loan by the ACV – again, that’s the ‘actual cash value’ – of your vehicle. So, hypothetically, if you owed $16,000 on a car that is valued at $20,000 by the dealer, your loan-to-value ratio would be 80%.16,000 ← owed on loan÷ 20,000 ← car value__________0.80 ← loan to value ratioThe tricky part, however, is figuring out your car’s actual cash value in order to do that math. Many insurers use a proprietary formula when calculating a vehicle’s ACV, which makes things a little tougher for the consumer. But, the good news is, you can get a ballpark range fairly easily.Figuring out your vehicle’s ACVFirst, your ACV will almost certainly be less than what you paid. For the most part, a car’s value drops significantly the moment someone drives it off the lot and it goes from new to used. But after that initial drop-off, the value depreciates much slower as the vehicle gets used and experiences regular wear and tear.The basic formula for computing actual cash value is to subtract depreciation from replacement cost, but that is pretty complicated. The easiest way to find out your ACV for the purposes of calculating your approximate LTV? Simply research your car's make and model and look for cars with similar mileage and histories. To do this, you can use the Kelly Blue Book, search for cars like yours for sale online, or even visit a local dealership and ask their thoughts.On the fence about whether or not to refinance your car?Pro tip: Try looking up the Kelly Blue Book or NADA guides for your exact model of vehicle, then compare it with what you owe on the loan. If this number seems high, it might be time to refinance!I’m interested in refinancingWhat is a good loan to value ratio for a car?In general, you want a low LTV. When refinancing a home, you want at least 20% equity in the home, so an 80% LTV or lower. Vehicles are a little trickier, since they depreciate in value over time. While an LTV less than 80% is ideal, it’s not uncommon to have an LTV around 100% on your existing loan when it comes to car loans. When getting a new loan through refinancing, a high LTV won’t necessarily disqualify you, but depending on the lender, you may be asked to put down a down payment to lower your LTV (and we’ll get into why in just a second). All that said, the lower the LTV, the better the interest rate you’re likely to get. So a lower LTV is always better for you as the consumer.Does your loan-to-value ratio affect your interest rate? Yes, it certainly can. This is because lenders take your loan to value ratio into account when deciding how much they are willing to lend you and at what rate. Your total amount owed on any type of loan, including car loans and mortgages, should be lower than the market value of the vehicle or home you want to finance. In general, a higher loan-to-value ratio translates to a higher interest rate.How does a down payment affect my auto loan?With some loans, the lender will request a down payment when you refinance. This down payment is used to reduce the loan to value ratio for your new loan. In other cases, even if the lender doesn’t ask, if you have the financial flexibility, you may want to add or increase a downpayment in order to help you save more money and pay less – both monthly and in the long run.This is all done because your LTV percent can affect both the interest rate available to you and overall lender options. In fact, some lenders have an LTV ceiling, meaning they won’t lend if the LTV is above a certain percent. Again, the higher the loan-to-value, the more risk the lender has to take on (and you, too!), so it makes sense that a better LTV would give you more and better options for your new loan. For many loans, increasing the amount of your down payment will likely decrease the total cost of borrowing money for that purchase and could even save you some cash in monthly payments!And that’s everything you need to know about your car’s loan-to-value.Now you know what a loan to value is on a car and why it matters. We hope you found this article enlightening. While we have you, if you’re researching LTVs because you’ve been thinking about refinancing your vehicle loan, we can help! The team here at Auto Approve will work with you one-on-one through every step in the process – whether that means getting prequalified online or finding an offer tailored just for you. Get started today by filling out our simple form to get a quote in minutes.GET A QUOTE IN 60 SECONDS

Are refinance rates different from the rates on new car loans other people are getting? It's a worthy question.Everywhere you turn, it seems like people are talking about interest rates. Terms like “historically low” and “all time low” are being tossed around like confetti, and you definitely don’t want to miss out on whatever party is happening (especially if that party is about saving you some cash, right?). But wait – you already have an auto loan, so how can you benefit from all of this? The answer, of course, is refinancing.Let’s take a look at the benefits of vehicle refinancing.When you refinance a car, you start over with a new loan, and your interest rate can change drastically.Is the process of refinancing the same as the process of applying for a new auto loan?Refinancing is simply paying off your existing loan with a new loan. You are essentially just replacing one financing option with another. The new loan will ideally have a better rate or some other favorable features that make it more desirable than the original loan. You will still have to apply for the new loan, you will still be bound to a loan payment schedule, and you will still offer your vehicle as collateral.The Application Process is the SameWhen refinancing your car, you will need to do research and apply to different lenders, just as before. You will have to provide the same documentation as you did the first time. These documents usually include the following:Photo ID. This can be a passport, driver’s license, or other government issued photo identification.Your vehicle’s information. This often includes the bill of sale, VIN number, the make, model, and year of your car.Proof of income and financial history. Lenders want to see that you are actively earning income. The lender will specify what documents they wish to see, but this often includes pay stubs, banking information, credit history, and other financial account information. This will verify that you are a strong candidate for a new loan and that you will be reliable with your repayment.Proof of residence. Lenders need to verify where you actually live. This can be a mortgage statement, lease agreement, or utility bill. PO boxes are not acceptable as proof of residence.Proof of insurance. Lenders will want to know that there is state-required insurance on the vehicle.Think of these papers as your resume or online dating profile. You want to look as desirable as possible to the lenders you are pursuing. The more desirable you are, the more worthwhile refinancing will be.Just like with your original application, you want to compare the different offers and see who offers the best terms overall. At Auto Approve, we'll help you compare all of your offers to ensure that you are getting the best deal possible.The Loan Terms May DifferAfter refinancing, you will still have an auto loan that you will need to make regular, scheduled payments on. Your payment schedule may change, however. Your schedule may be shorter, so that you can pay off your car faster. Your schedule may lengthen, making your monthly payments lower. Or, your payment schedule may stay the same. And your vehicle will ultimately serve as collateral for your loan, as it did with your original loan.The main benefit of vehicle refinancing? The interest rate.If you are simply changing from one loan to another, why bother refinancing a car? Why bother with that whole lengthy application process, the approval, and the possibility of rejection? The biggest, most important reason of course – money. You can save a boatload of money by changing your interest rate. The lower your interest rate, the less you pay in interest (duh) and the more money in your pocket at the end of each month.There are many reasons your interest rate can change when you choose to refinance your vehicle. These reasons have to do with your personal credit, income, and job status, as well as the economy in general.Increasing your credit score can result in a lower interest rateYour credit score is the single biggest factor in your refinance rate. If your credit score has increased since your original loan, you may be eligible for a lower rate. The following factors can help contribute to a higher credit score:History of on time paymentsLow balances on credit cardsOlder credit accounts that are in good standingHaving a good mix of credit card and loan accountsA small amount of new credit inquiresIf you have a history of late payments or carry high credit balances, these can negatively affect your credit score. If you have made a lot of new credit inquiries recently, this can also lower your credit score, so you will be better off waiting a year or so to apply for car refinancing.It is generally recommended that you pull your credit report ahead of time and review it for any inconsistencies. It is free to pull your credit report from the three major agencies once per year without it negatively affecting your credit score. These agencies are Equifax, Experian, and TransUnion. If you come across anything that is incorrect, you can dispute it with the credit bureau and petition to have it removed from your report. An increase to your income or change in job can result in a lower interest rateIf your income has increased since your original loan, lenders may view you as being more financially stable and therefore offer you a lower interest rate. But the number on your paycheck isn’t the only factor that matters. Having a stable, salaried position may secure you a better rate than being self-employed or working as a freelance employee. These will all help you become more attractive for a vehicle refinance. A decrease in your debts can result in a lower interest rateIf you have less debt than you did when you originally got your loan, lenders may view you as being more financially stable. Decreasing the amount of money you owe in general can lead to lower interest rates.The current economy is offering lower interest ratesRefinance rates depend in part on how healthy the economy is in general. Big banks adjust their target interest rates to respond to the economic climate. If the economy is strong, they tend to increase interest rates. If the economy is a bit sluggish, they lower interest rates to encourage spending. After the tumultuous 2020-2021 economic season, interest rates are currently at historic lows. However, many economists think that as the months go on, the interest rates may start to steadily increase. So, if you are wondering, “When is a good time to refinance a car loan?”, the answer might be right now.And that's everything you need to know about refinance vs. new car ratesAs you can see, there are many complicated factors that make up the interest rates for refinancing. It can feel overwhelming when there are so many different lenders to consider, all of which have different rates and terms to offer. That’s why, at Auto Approve, we work as your advocates, approaching different lenders to help you find the best rate and best terms available. When you refinance with Auto Approve, you can put more money back in your pocket for the things that matter, and we make the process quick and hassle-free – and never mark up your rate.GET A QUOTE IN 60 SECONDS

It started with toilet paper and aluminum cans, then bicycles and lumber. The world has gone through wild cycles of demand and supply over the last year, but not many people could have predicted this economic brain-teaser: car prices are through the (metaphorical) roof, with no indication of slowing down. For decades, conventional wisdom has held up for individuals who are purchasing a car. If you get a brand new car, you’re told that its value depreciates as soon as you leave the parking lot. A used car’s value only went down with time and kilometers. Conversely, if you were in the market for a used car, you could count on paying a fair price given the age and usage of the vehicle. In 2021 however, used car prices saw their biggest price increase in 68 years. Here’s what that looks like, according to Business Insider: An inflation by any other name...When the May consumer price report was published earlier this year, there was one glaring anomaly that, given the circumstances, was very alarming. The US was finally showing signs of coming out of the pandemic-induced recession, and business trends were looking up. However, the data showed inflation rising at the fastest pace since the 1990s. Some people (and economists) are using this data as signs that a long inflationary period is on the horizon. Could the government policies and market trends during the pandemic actually lead to a multi-year, super-inflationary period?Turns out that the trend was driven in large part by the uptick in just a few categories. According to Vox.com, about half of the increase in prices could be attributed to just four categories: used cars, rental cars, hotels, and plane tickets. Notice a pattern?Source: Vox.comDemand for cars and travel: Fast and furiousIn a normal year, used car prices typically rise about 1% annually. In 2021 so far, used car prices are up nearly 30 percent. Two factors are behind this unprecedented rise: supply chain disruptions in the new car market due to a global shortage of semiconductor computer chips, and the available inventory of cars.The semiconductor chip shortage: This has been a weird year for semiconductor microchip manufacturers (and everybody else). Car manufacturers cancelled orders for new chips early on in the pandemic because of low forecasted demand, but the opposite scenario turned out to be true. Earlier in the year, there was a major shortage of microchips, especially for North American car companies like Ford and General Motors. Fewer new cars were manufactured or brought over to the US. Available car inventory is low: With almost no US company able to manufacture new cars, used vehicles became harder and harder to come by. This led to a continent-wide inventory shortage. There just aren’t enough cars as there are potential car buyers. Dialing it in: how do these macro-trends impact you and your financial goals?At first glance, it may seem like buying a car is not a financially feasible decision anymore, at least in the near future.However, the rise in car prices have led to an unanticipated bonus for potential car buyers: auto loan refinancing approvals have increased 66% since May 2020, for the most part due to the rise in vehicle values and their positive impact on loan-to-value ratios (more on LTV later).It’s a win-win. Sellers get the immediate payoff from the current prices, especially if they’ve been wanting to sell or trade-in their wheels for a while. Buyers are getting approved for auto refinance requests more than ever before. As vehicle values go up, the Loan-to-Value ratio adjusts downward automatically. Since a lower LTV makes it easier (and cheaper!) for borrowers to refinance, this is a great opportunity for buyers in the market.Loan-to-Value (LTV): what it means and why it mattersLTV, or Loan-to-Value, is an important ratio to know when you’re financing a large purchase like a car or a house. It is a measure of risk, showing lenders (and buyers) to what degree a loan is backed up by a tangible, real asset. LTV is calculated by dividing the loan amount by the fair value of the asset. Say the car that you’re purchasing is $20,000 and you get a loan for $15,000, your LTV ratio is 75%. That means that 25% of the appraised value of the asset is not covered by the loan. The Loan-to-Value ratio is an important consideration when lenders are figuring out who they can loan out to (and at what rate). LTV ratios trending lower are great news for borrowers who may not have been able to get approved for auto loan refinancing in the past. Similarly, borrowers who already qualified for a refinance will get better loan terms if they apply now. Advantages of refinancing your auto-loanAccording to Experian, the average loan amount for a new vehicle is $33,739, and a used one usually runs up to about $20,723. Since a car is a major purchase for most people, going for refinancing while approval rates are so high can help you lower your interest rate, reduce your monthly payment, and improve your cash flow. Essentially, refinancing a car loan involves borrowing money from a new lender to pay off the current car loan lender in order to get more favorable rate terms on your new loan. Here are more details on how you can benefit from refinancing your car loan:1. You’ll end up paying less interestMost borrowers will end up paying less interest over the term of their loan if they refinance. Here is a calculator you can use to find out how much money you’d be saving through a refinance. The final amount depends on the remaining life of your loan and your new rate, but usually taking a few hours to refinance your auto loan can add up to hundreds (if not thousands) of dollars over years. 2. You can improve your cash flowIf you purchased your car a few years ago, you would not have had access to today’s historically low rates. Or maybe you financed your car through the car dealership, which generally doesn’t have the lowest rates in the market. Finally, if your credit score or income was lower than what it is right now, you can almost guarantee a lower rate through a refinance. While there are fees associated with refinancing an auto loan, borrowers almost always save more than they spend. Generally, if you refinance early on in the life of the loan, you’ll save more money. Personal finance website Credit Karma found that the average savings for members who refinance loans through its service is $3,000, or about $55 per month.3. Your LTV value will most likely improveRefinancing your auto loan may lead to a lower LTV ratio. Your car gets a brand new appraisal during a time when car valuations are much higher than previous years, so the ‘value’ part of the Loan-to-Value ratio goes up. A lower LTV in turn can allow you to make smaller monthly payments, if that is what fits into your budget right now. It also means you have more equity in your asset (your car), and you can use that higher valuation to support other financial moves (like using it as collateral for a business loan, etc).Why now is the perfect time to refinanceThe pandemic caused an unprecedented reduction in the supply of both used and new cars. And pretty much immediately, prices went up. This market bubble, combined with the historically low rates that the government has introduced, presents an opportunity for car buyers to refinance their car purchase. With a 66% increase in auto refinance approvals since last year, borrowers should take advantage of market trends while they can. There is a strong case for consumers to secure a refinance during a period of historically low interest rates and high car values. If you’ve been thinking about refinancing your auto loan, now is the time to apply. Unlike refinancing a mortgage, refinancing a car loan is extremely easy. It can almost entirely be done online and within a couple hours in most cases. Prospective buyers who did not get approved for auto loan refinancing even a few months ago might be hesitant to try again, but remember that the lower LTV ratios right now mean that your application is more likely to get approved without you having to take any additional steps. Consumers with strong applications (great credit, stable income, low debt, for example) may get even better loan terms. Rates are as low as 2.25% right now, making the cost of borrowing almost negligible. Simply put, borrowers benefit when rates are low. If you’ve been looking for a way to cut down on your monthly expenses, this is one expense that can make a huge difference.Although car values are expected to remain high for another few months, the truth is that a trend like this quickly gets corrected through policies and market forces. Consumers and borrowers who have been on the fence should take advantage of this market sooner rather than later and refinance their auto loans while conditions are still so favorable. GET A QUOTE IN 60 SECONDS

Countless articles cover refinancing a car or terminating car leases prematurely today. But, what about motorcycle loans? Does it work the same way it does with a regular car loan? The answer is yes, you can refinance your motorcycle loan, and we’re going to explain it in-depth below.Similar to refinancing a car, when it comes to refinancing a purchase as expensive as a motorcycle, you want to do your due diligence and make sure that all information has been considered and reviewed. There are plenty of aspects that culminate in the final decision, which brings us to the first important question of the article: why do you want to refinance your motorcycle?Figuring out your ‘why’ can help you make a more informed decision down the line. Maybe your monthly payments are too high, or your spouse lost their job. Or, perhaps your credit score has changed dramatically, and you feel you can secure a more favorable interest rate that is related to your eligibility as a borrower. Think about why it is that you want to lock in a new loan rate for you and your motorcycle as you learn more about your options. You will be able to save money if you refinance to a lower annual percentage rate (APR), but you will also need to lower your payment as well – which can be done by refinancing for a longer term. Whether you are trying to pay off your bike more quickly, or simply lower your monthly payments, you will be able to save money when refinancing your motorcycle loan.If all of this sounds confusing, it’s because it can be if you don’t review the information thoroughly. Regardless of your reason for refinancing, any vehicle or motorcycle loan is up for negotiation, especially if your credit score changes. It may be possible to even refinance with poor credit, but do note, the trade-off is higher interest rates in the end. That’s why you always need to do a side-by-side comparison of pricing options over the course of the loan term so you know if you are selecting the option that is best for you.How to Refinance a Motorcycle LoanWe’ve been conditioned to assume that refinancing anything is a lengthy and complex process. In fact, with proper preparation, refinancing doesn’t have to be overwhelming at all. Lowering the cost of your motorcycle financing can save you thousands over time, which can make the entire process worth it. Will it require extra time from you? Yes. But if you align with the right lenders, you can save time and money throughout the payment cycle of your motorcycle.So, you’re ready to learn more about refinancing your motorcycle. You want to figure out if there are savings in the refinancing process and all of the title fees that will be paid for by the interest savings. We applaud you for taking this first initiative, and learning more about what refinancing a motorcycle loan can do for you.Next, it’s time to think about the actual rates. How do you know if you are agreeing to a good rate?Step 1: Sift Through Your Options. When you know how much you need to borrow, you can start to compare rates and how they stack up against what you currently pay. Rates will vary by lender, your credit score, and the age and make of your motorcycle. Each lender will come with its own credit score requirements. In general, the higher your credit score, the better the rate you will be able to secure.Step 2: Use the Internet. There are many online tools that can help you arrive at a final number for repaying a loan. One of the tools is a refinance calculator, which can help you organize the loan amount and term, and how that relates to a final monetary amount.Step 3: Check Your Credit Score. When you apply for refinancing, lenders will submit a hard inquiry on your credit. This will temporarily lower your score (it will bounce back). That’s why you want to check your credit score ahead of time, so you know your current standing. You want to do your homework and pick the one company you believe will work in tandem with your loan requirements. Step 4: Look Out for Fees. The fees are where a lot of these companies make their money and are written right into the leasing or lending contract. The fees can come from a variety of things related to the application process. Be sure to ask any potential lenders if they charge any fees.Step 5: Collect Your Documents. By organizing the documentation you are going to need ahead of time, you will be able to expedite the process more quickly. Things you can gather include the vehicle identification number, the make and model, the value of your bike, and the bike’s insurance information. When all of this is gathered, you can complete the application form quickly and submit it. If the lender agrees to take you on, you will need assistance in paying off the loan since the lender will not permit you to pay it off on your own. Once this is done, you will begin paying monthly payments to the new one. Be sure to always check that the old loan has been settled before you stop making your payments on it. If the refinancing does not overlap, you could be pegged with a late payment penalty that will impact your credit score.Refinancing your motorcycle loan can be a viable option for you if you want to save money or benefit from an improvement in a credit score. Here at Auto Approve, we make refinancing painless for our clients, which is why we want you to know we can support you through the process.Get in contact with our team today.GET A QUOTE IN 60 SECONDS

We can’t always control the circumstances in our lives, which is why at times, our financial situations may change without warning. Whether you want to simply lower your car payment, you want a lower interest rate, or you want to remove a co-borrower from your loan, auto refinance is a viable and responsible option that is available at your disposal today.When you elect to refinance your car, Auto Approve makes the process easy by paying off your old loan and setting up your new, more favorable loan. This can be an option for you no matter what your credit score is. Most people don’t realize that they may qualify for a lower monthly payment or interest rate, or how simple it is to remove the co-signer from your original loan for whatever reason. The beauty of auto refinancing is that you get a fresh, new start with better terms and rates than your original loan. The fact is, most people are eligible for much better terms than they currently have. It’s always smart to sit back and reflect on how you can achieve the best possible loan terms and rules for your present financial situation. The process just takes a few minutes - you submit your information, and Auto Approve taps into their network of the nation’s top lenders to get you the best terms possible.But, before you dive into auto refinance full-speed-ahead, let’s first look at a general overview of how to refinance your car, and if it makes sense for you.How to Refinance Your CarGeneral Overview: Does Refinancing Make Sense for You?Although auto refinance makes sense for the majority of situations, it’s still something you want to review before you commit yourself fully. If your current loan has a prepayment penalty, you will want to explore what that penalty looks like and if you can have it waived. Most of the time, there is no prepayment penalty, but it’s always wise to do your due diligence and check.If there are additional fees associated with canceling the loan, like needing to re-register the vehicle and transfer the title after refinancing, plan for this ahead of time. Fees can change per state, so it’s worth checking on what the specific details are for your state.You also want to consider the age of your car. Some lenders will be stricter about refinancing cars that are over 10-years-of-age or with more than 100,000-miles on the car. Overall, though, if you need to change the terms of the loan immediately or your credit score has improved, then the cost savings that come with these changes can override the fees mentioned above. That’s why auto refinance is something that is recommended for the majority of people today. We just want to encourage you to, as always, do your homework.Gather the Necessary Documentation:Now that you have determined that you want to pursue auto refinance, it’s time to collect the necessary documents to make it happen. Here is some of the information to anticipate presenting: employment information and history, residential information and history, social security number, date of birth, proof of mortgage statements, and address.Some lenders will want to know that you can repay the loan you are signing to. A paycheck stub, or a tax return can satisfy this request. They may also request proof of insurance as part of the process. Next, you will need to know the balance on your current auto loan, as well as that lender’s information if you are switching to a new lender. It’s worth noting your interest rate and length of the prior loan so that you can use that as leverage when shopping for a new loan.You will need the vehicle identification number (VIN), which can be found on your insurance card or located on the registration and title statements. Speed Up the Process with Prequalification:It’s time to expedite the process with prequalification. Applying for prequalification can be a great place to start so that you know your leverage. To get prequalified, the lender will gather a few pieces of your personal information as stated above. Once the information has been gathered, Auto Approve will prequalify your file and give an estimate or pre-approval that will provide you with an idea of what rates and terms you qualify for at that time.Apply for the Auto Refinance Loan:Ok, the moment is here. You are ready to apply! You will need to complete a loan application. Auto Approve then decides the best fit lender based on the prequalification and the credit profile of the applicant. Our team will submit the application to the lending institution. We will contact you for approval prior to submitting the application so you are in the loop from start to finish. Should the loan be approved, you will sign the paperwork presented by the lender, detailing the terms of your new loan. Always keep a record on file for future reference. The minimum amount you owe each month will be included via the digital copy of the deal. Be sure to never go below the minimum amount. If possible, pay more than the minimum amount to shorten the life of the loan.Transferring Your Old Loan:The transition from your old-to-new loan will be handled by Auto Approve. Be sure to still reach out to the previous lender to ensure that the transition has been done timely and professionally. When to Refinance a Car LoanWe know that was a lot of information, which is why Auto Approve is here to assist you throughout the entire experience. We make refinancing simple and easy, saving you time, frustration, and potential credit dings along the way. Start with a quote through our platform, and allow us to work with banks and credit unions to find your best rate. That’s it. Auto refinance, made with you in mind.GET A QUOTE IN 60 SECONDS

It’s hard to overstate the importance of a good credit score. After all, they are the main factor that lenders use when determining whether or not you are a good candidate for a loan. But your credit score is important for reasons beyond borrowing. A good credit score can help you score a better apartment, get you better rates on car insurance, and more. But how much do you really know about your credit score, and what questions should you be asking?Here’s everything you need to know about your credit score.What is credit? And what is a credit score?Credit refers to any agreement where a borrower receives money from another person or institution with the understanding that they will repay the money, usually with interest. When people talk about credit, they are referencing their credit history, which is a record of their credit usage. A credit score is a number that indicates to lenders their capacity to repay a loan. A credit score is between 300–850 and indicates a consumer's creditworthiness. The higher the score, the more likely a person is deemed to pay back their loan. How are credit scores calculated?Credit scores take into account five different factors in your credit history. Each factor is weighted differently. The factors are:Payment history (35%). Do you pay your accounts in full and on time?Amounts owed (30%). How much money do you owe?Length of credit history (15%). How long have you had accounts?Credit mix (10%). Do you have a healthy mix of accounts?New credit (10%). Are there new accounts that you haven’t proven your ability to pay?Every month different agencies will voluntarily send information to credit bureaus. These agencies typically include banks, credit unions, retail credit card companies, mortgage companies, car loan lenders, and debt collectors. These companies will share:Any new applications for an accountThe date a new account is opened and the loan amount/ credit limitThe account balanceThe status of payments madeWhether or not the account is sent to collectionsAdditionally, credit bureaus also purchase public records from public records providers. These include liens, court judgements, and bankruptcy filings.How do I know if I have good credit?The best way to know if you have good credit is to simply check your credit score. There are many sites that will allow you to check your credit score for free, so it’s a good idea to monitor it regularly. Additionally, you should check your credit report at least once a year (but we recommend reviewing it three times).Credit bureaus will allow you to access your credit report once per year for free and without it affecting your credit score. If you do this once every four months at each of the three bureaus, you will be able to effectively monitor your credit.Your credit score will follow into one of five categories, which will indicate the health of your credit score.Exceptional (Super prime): 781 to 850Very Good (Prime): 661 to 780Good (Non prime): 601 to 660Fair (Subprime): 501 to 600Poor (Deep subprime): 300 to 500What should I look for in my credit report?When you are able to review your credit report there are several things you should look for. Your report is broken down into four sections that you should review.Your personal information section. You should review to make sure that your name, address, social security number, employment history, and marital status are all up to date.Your public records section. You should review this to make sure that there are accurate records of any lawsuits, bankruptcies, liens (including tax liens), and judgements. Your credit accounts section. This will be the longest part of your report, but it's where the meat of your credit score lies. Review it to make sure your payment history is correct, that account ownership is correctly listed, that debts that are paid off are listed as so, that closed accounts are accurately noted, and that there is no negative payment information that is older than seven years.Your inquiries section. Review this to ensure that you authorized any hard inquiries on your account. It is illegal for someone to request a hard inquiry without your consent.If you notice any errors to the credit agency as soon as possible. They will look into the matter within 30 days. If they do not comply they will be in contempt of the Fair Credit Reporting Act.What are the benefits of good credit?There are many benefits of having good credit, and in general it will make your financial life much easier. These benefits include:You will be offered lower interest rates on credit cards and loansLenders will be more likely to approve youYou will get utility services more easilyLandlords will approve you for rentals more easily You will be approved for higher credit limitsYou will look better to potential employersYou will get better insurance ratesYou will have better negotiating power for loans and accountsWhat credit score do I need to refinance my car?There is no magic number credit score when it comes to refinancing your car. But car loan refinance is much more beneficial when your credit score is in good shape.The car loan APR you are offered will be based on a few factors:Your credit scoreYour income and debt-to-income ratioYour vehicleYour current loan informationCurrent market ratesYour credit score is the factor that you will have the most control over. The better your credit score is the lower the car loan APR you will be offered. The best rates are reserved for those with the best credit, so taking the time to improve your credit score is well worth it.Does refinancing affect credit score?People commonly wonder if refinancing hurts credit score. And while it will affect your credit score slightly, the benefits of refinancing a car will far outweigh any slight dips that it may cause in your score. Refinancing a car loan affects two parts of your credit score, your history length and your new credit. Opening a new account, it will shorten your credit history length. It will also count as a new credit and the hard inquiries will be noted in your credit report. But both of these will only cause slight dips in your score, and hard inquiries only affect your credit score for about a year.But the benefits of refinancing a car loan can really help your credit score. If you are having trouble making your monthly payments, refinancing to a longer repayment period can lower your monthly payments and make your monthly budget more manageable. This means that you will be able to more consistently make payments (on all of your accounts, not just your car loan). And that can really bump your payment history section, which is the most influential section of your credit report.Refinancing to a lower car loan APR can also loosen up more money in your wallet so that you can pay down other debts, which will also improve your credit score.How can I raise my credit score?If you are interested in refinancing a car loan it is a good idea to work on your credit score before applying. This will give you the best chance to be offered good terms and a good car loan APR. There are a few steps you can take to ensure your credit score is in its best shape before you apply.Make on time payments to all of your accounts (consider autopay if applicable).Check your credit report for errors.Pay down debts with high credit utilization ratios first.Continue using your credit responsibly.Don’t close any credit accounts.Request higher limits on your accounts.Catch up on any past due bills.Have someone cosign a loan with you (you can benefit from their good score).There is no quick way to improve your credit score. It will take time and commitment, but it will be worth it for you in the long run.That’s everything you need to know about credit scores: what they are, why they are important, and how you can improve yours.Building a great credit score takes time, but it’s incredibly important to your long term financial success. Better interest rates, easier approvals, and more peace of mind are waiting for you on the other side.Refinancing a car loan is a great step to helping your credit score. While you want your score to be in great shape before applying for refinance, keep in mind that it can help you improve your score too by loosening up some money every month.If you are thinking about refinancing your car loan, contact Auto Approve today! Our experts can help guide you through the refinancing process and help you start saving money immediately.So don’t wait, contact Auto Approve today to get started!GET A QUOTE IN 60 SECONDS

When you are applying for a car loan, you may be wondering what lenders are taking into consideration. Just how far do they dig, and how can you be sure that you will be approved for a new car loan? Here’s how banks determine car loan eligibility (and how you can make sure you qualify).How do banks determine if you qualify for a car loan?Lenders will look at a lot of information when determining whether or not you are eligible for a new car loan. Your current finances, your credit score, and other factors are all considered when determining eligibility.Your current incomeLenders want to see that you have steady income. Lenders will want to see current pay stubs if you are a W-2 employee (usually they will want to see more than one). If you are self employed or receive social security, you may need to provide bank statements. The lender will tell you what documents you will need to provide. They will also look at how your income compares to your debt (your debt-to-income ratio).Your credit scoreWhen you apply for a car loan lenders will pay special attention to your credit score. Your credit score is an indication of how likely you are to repay your loan, so the higher your score is, they will view you as more likely to repay your car loan. A good credit score will also help you to secure the best car loan APR possible.Your identity and residenceLenders will need to verify that you are who you say you are. They also need to know where you live so that they can repossess the car should you fail to make payments. A government issued ID is usually required for this. If you do not have one, a utility bill or lease agreement may suffice.Your down paymentAre you wondering “how does increasing the size of your down payment impact your auto loan?” The answer is, a lot. Lenders feel more comfortable giving you a car loan if you make a down payment. It will also mean that you have to borrow less money and will in turn get a more favorable car loan APR.What credit score is needed for a bank auto loan?A good credit score means you are a more trustworthy loan candidate in the eyes of the lender. Credit scores can be broken down into five categories: Exceptional (Super prime): 781 to 850Very Good (Prime): 661 to 780Good (Non prime): 601 to 660Fair (Subprime): 501 to 600Poor (Deep subprime): 300 to 500 There is no hard and fast rule for what credit score you need to have to secure a car loan, but generally you will have an easier time getting a car loan if your credit score is above a 620. But don’t just take our word for it. The latest Experian data from the third quarter of 2022 provides data on the car loan APRs offered by credit score.Superprime (781-850) average APR offered: 2.96%.Prime (661-780) average APR offered: 4.03%.Nonprime (601-660) average APR offered: 6.57%.Subprime (501-600) average APR offered: 9.75%.Deep subprime (300-500) average APR offered: 12.84%. Additionally it found that 65% of borrowers had a credit score above 661, while only 2% of borrowers had a credit score below 500. So while it is clearly not impossible to finance a car with a poor credit score, it is significantly more difficult and borrowers are offered much higher car loan APRs.How do I qualify for a refinance for a car loan?If you are looking to refinance your current car loan, you may be wondering what requirements to refinance a car there are. The refinance requirements are similar to those of simply applying for a new car loan, but your current loan and vehicle must also be taken into consideration.Your loanWhen it comes to refinance, lenders want to see that your current loan is at least six months old (although experts recommend waiting a year to refinance to give your credit score time to settle again after your initial financing). This will show that you can make your payments for this loan on time and in full. Some lenders might not require this, but you will need to at least wait until the car’s title is in the possession of your current lender. This can take weeks or even months for the paperwork to get straightened out. Lenders will also consider the time remaining and the balance remaining on your loan. Lenders usually have requirements for how much time is left on your loan (two years is pretty standard). Lenders also typically have requirements for how much of a balance remains on your car loan ($5,000 is another typical amount). If you do not have a lot of money or time remaining on your car loan you may have a difficult time qualifying for a car loan refinance.Your vehicleLenders will also consider the car you are refinancing. If your car is too old or has too many miles on it (more than ten years old and/or more than 100,000 miles) lenders may not approve you for refinancing. Some lenders will refuse to refinance certain makes and models, such as large engine or commercial vehicles. Your vehicle’s history will also be taken into account by lenders. If your car has been in a significant accident or had water damage this might be an issue for refinance.The loan to value on your current vehicle is another piece that lenders will consider when it comes to refinance. Your LTV is the total amount of your loan divided by your vehicle’s actual cash value. If this number is more than 125%, you may have a hard time getting approved for a car loan refinance. Other considerationsWhen it comes to refinance, lenders will again consider the following: Your current income and debt to income ratioYour credit scoreYour identity and residenceYour down paymentWhen applying for car loan refinance you should prepare yourself as much as possible by ensuring your credit score is in tip top shape.That’s how banks determine car loan eligibility for both new cars and refinance. Lenders look at a lot of information when determining whether or not you will qualify for a car loan. It’s a good idea to gather as much information as you can ahead of time and work on your credit score to give yourself the best chance possible of getting approved.If you are considering car loan refinance, Auto Approve is here to help! Our experts can guide you through the process and help find the refinance loan that is right for you.So what are you waiting for? Get your free quote today!GET A QUOTE IN 60 SECONDS

Insurance, warranties, vehicle protection plans, GAP insurance. Let’s be honest, it can be downright confusing to keep all of these products straight. While they are all meant to protect your property, they all work in different ways and protect you in different ways.Let’s talk about GAP insurance, how it works and how you can decide if it’s worth it.What is the purpose of GAP insurance?Before we get into what GAP insurance is, let’s talk about all of the different vehicle protections you have and discuss what protects what.WarrantyA warranty is provided by the car manufacturer and covers any problems that may occur to the car that are not your fault. There are two types of warranties, limited bumper to bumper warranties and limited powertrain warranties. Limited bumper-to-bumper warranties cover most things that can go wrong on your car, generally only excluding things like wear and tear and theft. Limited powertrain warranties cover the parts of your car that make the car drive, such as the drivetrain and the transmission. These typically last three to five years depending on the dealer.Vehicle Protection PlanA vehicle protection plan is an optional feature that can cover if something goes wrong on your car that is not your fault after your initial warranty expires. It is essentially an extended warranty. Coverage varies from policy to policy. Vehicle protection plans and warranties are designed to cover problems with your car that are not related to an accident.Car InsuranceCar insurance on the other hand is designed specifically for accidents and external factors that affect your car. Car insurance protects you in two ways: it covers any damage that occurs to your car as a result of an accident and protects you financially if you are liable for someone else’s injuries or damages. Car insurance is required in all states except New Hampshire (but you are still financially responsible for any damages that are your fault, so you should really have it anyway).There are different levels of insurance which all cover different things:Liability insurance is composed of three parts: bodily injury coverage per person, bodily injury coverage per accident, and property damage coverage per accident. This covers any damage you may cause to another driver, their passengers, or their property, including their car. Liability insurance is the minimum insurance requirement in most states. Comprehensive insurance, which covers the cost of damages to your vehicle if there is a non-crash accident, such as weather damage or theft. This also covers damage that occurs if you hit an animal. Collision insurance covers damages to your vehicle if you hit or are hit by another vehicle.GAP InsuranceGAP insurance, or Guaranteed Asset Protection, is optional insurance that kicks in when there is a gap between what insurance will pay and what you still owe on the car.Let’s say you owe $15,000 on your car when you get into an accident. Your car insurance decides that they will only pay out $12,000 in damages. This means that you are still responsible for $3,000 to the lender. GAP insurance would ensure that you do not have to pay this amount.How quickly do cars depreciate?GAP insurance protects you from depreciation. But just how fast do new cars depreciate? Well, pretty quickly actually. When looking at the rate of depreciation, we can divide it into three categories: after it leaves the lot, after one year, and after five years.After it leaves the lot…Your car loses value the second you drive your car off of the dealership’s lot. The car officially has an owner and is no longer a new car. It is estimated that a new car loses about 10% the moment it leaves the lot. Your car can go from $30,000 to $27,000 in a few seconds. After one year…Your car will lose the most value in the first year you have it. Experts estimate that new cars lose 20% of their value in the first year. After five years…After the initial depreciation of the first year, cars tend to lose about 15% of their value every year. By the end of the car’s first five years, it will lose about 60% of its original value. Depreciation occurs due to a number of factors, including:Mileage. High mileage shortens the amount of usable time left on the car and causes faster depreciation. Age. The older a car is, the less it’s worth. The Make and Model. Certain car’s depreciate at a faster rate simply due to supply and demand. Value is ultimately based on how much someone is willing to pay for it. If you have a less desirable car, expect your car to depreciate at a faster rate.Ownership History. Cars with fewer owners will depreciate more slowly than those with a lot of owners.Condition. If the car is in good condition and has not been in a lot of accidents, it will depreciate slower. If it has a pretty checkered past, it will deprecate at a higher rate. Regular oil changes, alignments, and general maintenance will slow deprecation. Color. While this seems insignificant, the color of your car will actually dictate depreciation. Neutral colors depreciate slower than other colors, since neutral colors are always in style. Is getting gap insurance worth it?GAP insurance is specifically designed for people who are financing, so it will not make sense for everyone to get it. But there are times when it is definitely worth it. Ask yourself the following questions to determine if GAP insurance is worth it. Did you put less than 20% as a down payment?GAP insurance helps you when your car loan is underwater. This means that you owe more on your car than your car is worth. Your car is more likely to be underwater if you did not put a significant amount down. Depreciation occurs at different rates depending on your car, but your car starts depreciating the minute you drive off the lot. The more you put as a down payment, the less likely your car’s depreciation will outpace the car’s value.Is your car a lease? Your car lease may specifically require GAP insurance, in addition to collision, comprehensive, and liability. Check the fine print to determine if it is necessary.Does your car have a high depreciation rate?As we mentioned above, different cars depreciate at different rates. Luxury cars tend to depreciate at the fastest rate, but every make seems to have a few models that suffer from depreciation more than others. Be sure to do your research to determine if your car will suffer. Do you drive a lot?One of the biggest contributors to depreciation (that you can control) is how many miles you put on your car. If you drive a lot, your car will depreciate faster and will have a higher chance of ending up underwater.Do you have a long repayment period?The longer your repayment period is, the higher the chance is that your loan balance will outweigh your car’s value. Long repayment periods are great for your monthly budget (after all your monthly payments will be lower when you have a longer period to pay the loan off). But long repayment periods mean that you will pay more in interest over the life of the loan and your car will have a greater chance of becoming underwater. GAP insurance can help protect you from this.Can you get gap insurance after you buy a car?GAP insurance is not offered by car dealerships, so getting it after you purchase your car is not a big deal. You can get GAP insurance through most standard insurance companies, or you can get it from a third party.If you are looking to refinance your car, Auto Approve works with you to make sure you get the best GAP coverage possible. Our loans come with GAP to protect you from negative equity. And the best news is that GAP insurance is incredibly affordable. Most customers can get GAP insurance for less than $14 a month. And considering how much money and hassle that can save you, it’s a real life saver (at an incredible price).That’s everything you need to know about GAP insurance, and how you can decide if it’s right for you. If you are considering refinancing your car, it makes really good sense to bundle GAP insurance in with your new loan. It is easy, affordable, and can save you a lot of headaches in the future. No one wants to get stuck with a bill they can’t afford (and a car that’s totalled and still keeping you in debt). Auto Approve is here to help you refinance your car loan with ease. Our experts can help guide you through the refinancing process and make sure you get the best car loan possible. Add in GAP insurance and you are set.So don’t wait any longer, contact Auto Approve today to get started!GET A QUOTE IN 60 SECONDS