Refinancing Auto Loan With Bad Credit – If you have bad credit, you know how difficult it can be to get financing. However, what you didn’t know is that you can still refinance a bad car loan to save a lot of interest costs. Bad credit can occur for many reasons, and even a short period of trouble paying can lead to a lower credit score, affecting your ability to finance items and increasing your interest rates.
Although refinancing a car loan with bad credit can be more challenging, there are still many benefits that make it worthwhile:
Refinancing Auto Loan With Bad Credit
Refinancing a car loan if you have bad credit is not complicated, but by following a few simple steps, you will be able to find the best option that meets your needs.
How To Get A Car Loan With Bad Credit
While it’s crucial to always stay on top of your credit report, it’s even more important if you have bad credit. Credit reports will sometimes contain inaccurate or outdated information, which can lead to a lower score than you should have. If you look at your report and notice there are errors, you can dispute them and credit reporting agencies will talk to creditors to keep the information up to date and accurate.
You’ll also want to know your credit score in order to find the right lenders to offer you refinancing options. They can also help you get a better idea of the interest rate you’ll pay when you shop around to find the best lender. While there are lenders that work with all types of credit scores, if your ultimate goal is to lower your interest rate, you will need to have a higher credit score than when you originally financed.
Before you start shopping around, you should first contact the company that currently finances your car loan. If your account with them is in good standing, you’ve been making your payments on time and your credit has recently improved, they may be able to offer you a refinance option. Refinancing at your current company can eliminate extra paperwork, and you might even get a better deal if they’ve seen that you’re up to date with your current credit.
If you decide not to refinance with your current lender, it’s time to start shopping around. Find lenders that offer refinancing solutions to those with bad credit. When comparing companies side by side, look at their annual percentage rate and all of their fees. Their available terms might also be something you should consider.
How To Refinance A Car: 7 Easy Steps To Save You Money Story
Although many lenders will offer financing to those with lower credit ratings, several auto loan lenders specialize in financing those with bad credit. Below are some of the best companies that handle these types of refinancing needs.
Honest Car Payment is an online car finance company that can help you with any type of car refinance. They specialize in traditional auto loan refinancing, lease purchase and cash back refinancing. Bad credit isn’t a problem, and if you’ve had a slight increase in your score since your first financing, they can save you money and lower your monthly payment.
Unlike some refinancing companies, Auto Credit Express does not provide financing, but connects users with a network of lenders that provide financing to people with bad or repaired credit. You will be matched with companies based on your creditworthiness and the amount of equity in your vehicle.
Another company that can connect you with multiple lenders is Tresl. They will take initial information and let you know which lenders have pre-qualified you and what rates they can offer. It is important to note that prequalification does not guarantee your rate, and this may change once all paperwork is submitted.
Refinancing A Car Loan
Refinancing can be even more difficult if you are bankrupt or have had your vehicle repossessed. New Roads is a loan company willing to take a chance on borrowers who have had significant credit problems in the past as long as they have demonstrated a good payment history for their current auto loan.
Bad credit car loan refinancing is possible and can help you save money on interest, lower your monthly car payment, or both. If you’re struggling with your current car payment but haven’t improved your credit scores, consider a cosigner with good credit. Having a co-signer can help you get a lower rate and better monthly payment, which can help you get your finances back on track.
At FIXD, our mission is to make car ownership as simple, easy and affordable as possible. Our research team uses the latest automotive data and insights to create tools and resources that help drivers gain peace of mind and save money over the life of their car.
We’re here to help you simplify and save on car care, so this post may contain affiliate links to help you do just that. If you click on a link and take action, we may earn a commission. However, the analysis and expressed opinions are our own. Car loan refinancing if you have bad credit may be possible. Some lenders specialize in providing auto loans – including refinance loans – to people with bad credit. If your credit has improved or rates have dropped since you got your car loan, you may be able to get better loan terms.
What Credit Score Do I Need To Refinance A Car Loan?
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Buying A Car With Bad Credit: Saving On High Interest Auto Loans
If you’re having trouble making your car loan payments or want to take advantage of lower interest rates, consider refinancing your car loan even if you have bad credit.
While there are no guarantees, you may be able to refinance your bad car loan. Whether you want to refinance to lower your interest rate, lower your loan payments, or get a loan with better terms, some lenders focus on auto loan refinancing for people with bad credit.
It may be possible to refinance your car loan if you have bad credit, but it can be difficult to get a lower rate if your credit hasn’t improved since you got your original car loan. Generally, the lower your credit score, the higher your interest rate.
If car loan rates have decreased since you got your current loan, you may be able to get a better interest rate. Checking historical data on average interest rates on new car loans is one way to determine if rates have generally improved. If the interest rate for the month you got the original loan is higher than today’s rates, it may be a good time to consider refinancing for a lower rate.
Auto Financing 101
But keep in mind that new car rates are different than refinance loan rates — historical data is just a way to get a general idea of the trend in car loan interest rates.
If your goal of refinancing is to get a lower monthly payment (as opposed to a lower rate), you may need to extend the term of the loan. Keep in mind that a longer term can increase the total amount of interest you pay over the life of the loan.
Check your creditworthiness before applying for a refinance loan. Check your credit reports for incorrect information and dispute those errors. Inaccuracies can hurt your credit score, which can affect your ability to qualify for a new loan.
Checking your creditworthiness and knowing your credit score can also help you set your expectations before you start shopping for a loan. For example, if a previous bankruptcy is still on your credit reports, you should look for lenders that consider applicants with previous bankruptcies on their credit history. You can check your Equifax® and TransUnion® credit reports for free on Credit Karma or request one free report per year from each credit reporting agency at annualcreditreport.com.
Does Refinancing Start Your Auto Loan Over?
There is no universal minimum credit score for refinancing a car loan. Different lenders have different requirements, and some lenders specialize in working with people with bad credit, including those with bankruptcies or repossessions in their credit history. But if your goal with refinancing is to get a lower rate, it helps to have one
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