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Is refinancing your car bad for your credit?

We noticed that many people are asking themselves 'is refinancing your car bad for your credit?'

Nicholas Hinrichsen - Published: September 17, 2020

Absolutely not! Refinancing will help your credit tremendously. See below the 5 steps to refinance your auto loan:

  1. Softpull credit: the lender will take a look at your credit file to get your score and understand your circumstances. A softpull will not impact your credit.
  2. Select loan company: different companies specialize on different credit scores. So once we identified your credit score through softpull, we know which company to work with for you.
  3. Understand your car: for auto loans, understanding what car you drive, what packages and features it has and how many miles you have been driving is important. We will ask for those details next.
  4. Structure your deal: once we understand your credit and car, we can structure the deal and present you the refinance loan terms (i.e. APR, monthly payment, term etc).
  5. Save you thousands: lastly, all that's missing is your green light and we're done. We will pay off your existing loan on your behalf and you'll make payments to us.

So in sum, refinancing is not bad for your credit. You don't need to do a hard pull on your credit until you know your terms and have a deal in front of you. Once you refinance, your monthly payments will likely be lower and you'll pay off your loan quicker. Both of these things help your credit and don't hurt your credit.

Haven't explored refinancing yet?
WithClutch.com is a fully digital platform that lets car owners like you do so from the comfort of their own home. No need to set a foot in a bank or credit union. You can lower your rate or get cash in as little as 20 seconds.

Follow three simple steps to refinance your auto loan, get approved in seconds and save thousands in minutes.

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