Wondering how to refinance a car loan with bad credit and late payments? If you want to get accepted for car loan refinancing, you must ensure that at least one year has passed since you took out the original car loan. In addition, you also need to show improvement in your credit score, as it will show your credibility before the lender. In order to have a good credit score, you must pay all the monthly car payments on time. If you have missed any, it will show on your credit and further deteriorate it. Due to this, you will face complications when qualifying for auto loan refinancing.
Qualification criteria for car loan refinancing
As previously mentioned, it is necessary to wait for a year so that your credit score shows improvement. It is a part of the refinancing process, and it does so much more than you can imagine. Refinancing means taking out a new loan to replace your original car loan with a new one. Mostly, the refinanced loan has better terms and interest rates. In order to qualify, you must meet the lender’s requirements, which are as follows:
- Be current on your monthly loan payments.
- Have equity in the vehicle (it mustn’t be negative equity).
- Make sure that the vehicle’s age and mileage meet the lender’s demands.
Are you confused about where and how to refinance? There is no need to be. First, you should reach out to your current lender and see if they have anything to offer you. If they don’t, go rate shopping because it is the best way to find the most suitable rate for yourself. You can also compare the offers and rates and choose what may seem ideal to you.
How To Refinance a Car Loan With Bad Credit and Late Payments?
Now that you are aware of the requirements for refinancing, you should also know what benefits it has. The most significant and only benefit of refinancing is that it helps lower your monthly car payments and thus saves money from the overall loan.
There are two ways by which you can refinance your auto loan:
· Find a loan with a lower interest rate
It is the ideal way to refinance your auto loan as it serves benefits that others can’t. Through it, you don’t only succeed in lowering the monthly payments, but you also save a hefty sum of money from the overall loan.
- Extend the loan term
This way proves to be beneficial if you are only aiming to lower your monthly car payments. It helps you get through any temporary financial struggle by making each month’s payment budget-friendly. However, you end up paying more than the actual loan amount because of the increased monthly payments.
The bottom line
Borrowers have reported that bad credit auto loans turn out to be highly costly and stress-causing because of the high-interest rates on such loans. However, you should keep your chin up and try your absolute best to make payments on time. This way, you will be able to better your credit score swiftly. After a year or two with this consistent routine, you will find that your credit score is good enough to refinance the car loan with a loan with low interest and save money.
At CarLoanRefinancing, we are readily available to lend a helping hand. If you are facing any complications in refinancing, we will guide you step-by-step. Besides, we can also help you meet a dealership that has the perfect resources to fill your needs. We work with thousands of dealers that are scattered throughout the U.S, which makes access convenient.
To get the process started, fill out our cost-free auto loan request form and get started on the refinancing.