Refinance Interest Rate

5 Factors Affecting The Refinance Interest Rate

September 8, 2022

If you’re in the market for a refinance, you know that getting auto refinance best rates possible is a top priority. But how much do you know about the factors that affect your refinance interest rate? In this blog post, you will be covered with five of them: credit score, loan-to-value ratio (or LTV), vehicle age, vehicle value and location. Here have a look:

Credit score

A credit score is a numerical representation of your creditworthiness. It’s based on information in your credit report, and it helps lenders assess whether you can be trusted to repay loans.

In short: If you want to qualify for a low-interest rate, your credit score has to be good.

To get the best refinance interest rate, improve your credit score by paying off any outstanding debt and keeping old accounts open (since having an open collection account can lower the average age of your accounts).


Loan-to-value ratio

A loan-to-value (LTV) ratio is the ratio of the loan amount to the value of the collateral. It’s a metric used to measure the loan-to-value ratio of a mortgage loan. The LTV is used by lenders to determine how much money they will lend you and what interest rate they will charge based on that amount. This can also affect your ability to refinance your home or get approved for another type of loan in the future.

Vehicle age

Your vehicle’s age, mileage and the length of time you have had it are all factors that can affect how much you pay for your auto loan. A car with more miles may be worth less than one with fewer miles, which could mean a higher interest rate.

Vehicle’s value

The value of the vehicle you’re refinancing can also affect the interest rate you qualify for, with a lower value resulting in a lower interest rate and vice versa. If your car is worth less than what you owe, consider taking advantage of this fact by refinancing to get out from under that liability.


Location is a big factor that affects the interest rate you’ll be offered on your refinance. The location of your home, job, and credit union matters.

If you’re looking to refinance with a mortgage broker or bank, then they will likely require an appraisal done on your property by an approved third-party appraiser to determine its value before offering any loans.

 This process can take anywhere from 2 to 4 weeks depending on how quickly they need it done and who they use for the appraisal (if they do not do it on their own). If this is what you’re looking for, then location will definitely come into play when negotiating with them over rates.

As professionals like Lantern by SoFi states, “You may be able to refinance an auto loan with bad credit if you have a positive track record of making payments on your current loan and/or have a cosigner. Shop around before deciding if refinancing is right for you, and don’t let any lender run a hard credit check until you’ve determined that refinancing your car loan with the lender is right for you.”


Many factors affect the refinance interest rate. Some of these include your credit score, job stability, and length of time at your current job. Additionally, some lenders will charge higher rates for loans that are considered riskier in nature such as those with low credit scores or high debt-to-income ratios.

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