Thinking about refinancing car loan, poor credit, payments ALWAYS made on time, for 1 full year?
Answers:
Applying for refinancing whether you get approved or not won't affect your credit score significantly. Any time you apply for credit you get a "hard inquiry" on your credit report. It may initially lower your credit score by about 5 points or so, but if you continue to make timely payments, your credit score will recover rather quickly.
If you are paying a high interest rate, there's a good chance you're currently "upside down" on your auto loan. Meaning you owe more than what the car is worth. Most lenders won't finance the entire loan if your loan is more than 120% of the vehicle's value. You may have to send in a large payment to pay down your loan before they will approve you for a refinance. This is something you should prepare for in advance.
If you've made on time payments for a year and haven't had any other bad marks in your credit report, you should go ahead and try to refinance. If you don't get approved, or don't like the terms of the refinance wait at least 6 months and apply again. Good luck!
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