Car Refinancing in Las Vegas and How It Affects Your Credit
Just because you signed a loan agreement for a specific amount and interest rate, that doesn't mean you need to be stuck with this interest rate for the duration of your loan. You may improve your credit score over the years and car loan rates may decline. Should you find a substantially better interest rate, you may want to consider refinancing. Here is how refinancing your auto loan impacts your credit score.
What You Need to Know About Car Refinancing in Las Vegas
Does It Impact Your Credit Score?
In short, yes, refinancing your car in Las Vegas does impact your credit score. When a potential lender looks at your credit score, they perform either a hard or soft inquiry. A soft inquiry does not have an impact on your score. For example, this could be your bank providing you with an update on your credit report.
However, a hard inquiry is performed by a lender who wants to make sure you are able to financially pay a loan back. A credit card company may send you an application because it has performed a soft inquiry that indicates you may qualify. When you initially apply, though, it performs the hard inquiry. Hard inquiries impact your credit score. So, when you apply to refinance your loan, a hard inquiry will be made, which brings your credit score down.
Don't Worry, It's Short Term
The thing about a hard inquiry is that it’s only short term. Realistically, a hard inquiry made on your credit report to see if you qualify for refinancing will remain on your credit report for about six months or so. If you are shopping around for different car refinancing options, make sure to do it all within a 14-day period; this way, all car loan inquiries will be bundled together and appear as a single hard inquiry. If you wait a few weeks, you'll have multiple inquiries on your credit report. While each will only drop your report by a few points, this duplicated several times over can impact your ability to apply for other loans.
Saving Money Long-term
Car refinancing in Las Vegas may hurt your credit score temporarily, but in the long run it is a better option to move forward with the refinancing (unless you only have a few months left on the loan). You'll save hundreds, if not thousands, of dollars paying the loan back, and by the time your loan is paid off, your credit score will have rebounded. So, it is well worth taking advantage of this money-saving opportunity.
At Clark County Credit Union, you can apply for an auto loan, as well as car refinancing in Las Vegas. Contact us today at 702-228-2228 to learn more about our loan process.