If you’re thinking about buying a car this year, it might be a good idea to wait until after you refinish your current vehicle. Buying a new car will affect your refinance terms in a big way.
What is a Car Refinance?
A car refinance is a financial transaction in which an individual borrows money from a lender in order to purchase a new or used car. The borrower typically pays the lender back with interest over time. This can help you consolidate debt, save money, and improve your credit score. Additionally, refinancing may increase the value of the car you purchase.
How does a Car Refinance Affect Me?
If you’re thinking about buying a car, it might affect your refinance. When you refinance, the interest rate on your loan is based on your credit score, your current debt load and other factors. Buying a car can increase your monthly payments and could lower your credit score. If you’re considering a car refinance, talk to a financial advisor to see if it’s worth it.
Is buying a Car Affect My Refinance?
Buying a car can affect your refinance. If you’re considering buying a car, make sure to discuss the purchase with your lender so they can understand your finances. If you have less than 20% equity in your home and are refinancing, your lender may not be able to approve the loan if you buy a car.
Conclusion
When you buy a car, it’s important to keep in mind that the purchase might affect your refinancing options. In most cases, the interest rate on your refinance will be higher if you have a car loan than if you don’t have a car loan. This is because having a car loan increases the chances that your debt-to-income ratio will be high enough to trigger adverse credit actions by lenders. You can minimize this effect by making sure that your monthly payments are able to cover both the interest and principal on your car loan, but be prepared for refinancing rates to increase as a result of owning a vehicle.