There are plenty of great benefits of refinancing a car, but how will that impact your credit score that you have worked so hard to build up over the years?
The answer to that question is “not much.”
Our lenders do run a credit check when you complete the application process, and a typical credit check can have a small effect on your credit, at least in the short term, as credit inquiries have been shown in some cases to lower scores by up to 5 points, before these inquiries fall off your credit report in two (2) years.
When you refinance an auto loan with CARS, it typically takes up to 14 business days for our lenders to pay off your existing loan and transition you to your new refinanced loan. During this period between approval of your new loan and pay-off of your old loan, be sure to continue to make your payment on the old loan if you have a payment due during this period. Missed payments, more than anything else can have a negative effect on your credit history.
How Auto Refinancing Works For Your Credit
The true impact of refinancing a car and your credit score is really about what you do with the new loan. Will you be making payments on time with your new refinancing loan? Will you be able to pay off the refinancing loan quicker than you would your original loan?
If both of those facts are true, and your new loan has a lower interest rate than your previous loan, there is a good chance refinancing your car can actually be good for your credit.
Learn More Benefits of Refinancing A Car
Read about how a new interest rate and refinancing your car can lower your monthly payments and even shorten the life of your loan here.
Want more information? Check out our frequently asked questions about how auto refinancing works and discover more benefits of refinancing a car through CARS.