If you wish to refinance your bad credit car loan, you must know that two things are a must when doing so. Firstly, you must be patient and have enough time on your hands. And secondly, you must show improvement in your credit score. Lenders usually wait for a year after you take out the original loan, but you should try your absolute best to improve your credit score as much as possible. If you have already met these requirements, you can refinance right away. Follow the given steps and get your bad credit auto loan refinanced.
How to refinance a car loan with a bad credit
In order to refinance your car loan, you have to check your credit score and get assured that there is an improvement since you last took out the original auto loan. You can get your credits to report by your bank, credit provider, or credit union, but there is an alternate way as well. You can get your FICO credit reports online by paying only a small fee.
If you consider your credit improvement enough for refinancing, contact your current lender and see what they have to offer. If they are willing to refinance your loan, you can continue working with them and if not, start looking for a new lender.
When searching for good rates and terms for the auto loan, make sure to limit the inquiries to a 14-day time frame. The reason is that it will reduce any impact on your credit score and keep it well-balanced. This step of refinancing is called the “rate shopping window”, and when you request inquiries on the same loan, it is considered a single hard inquiry.
Is refinancing the right choice for you?
Sometimes, due to unfortunate circumstances, you can no longer afford to pay your original loan. In this case, if you wish to keep your vehicle but want to reform the loan terms, you should take refinancing as your first option. Refinancing means replacing your original car loan with a new loan that has a better interest rate or/and a longer loan term. For refinancing, you can either choose to stay with your current lender or find a different one. It’s totally up to you.
Refinancing is the right choice for you if you aim to lower your monthly payments and save money. Here are two ways to refinance your bad credit auto loan:
- Extending your loan term
If you opt for this option, you will pay your monthly car payments for a longer time. It is why you should be cautious before refinancing your loan this way. This option surely helps lower your monthly payments, but you will end up paying more money than the original loan because of the added interest charges.
- Qualifying for a loan with a lower interest rate
If you succeed in improving your credit score, you will qualify for a loan with a low-interest rate. It means that you will save a hefty sum of money throughout the lifetime of your loan.
If you find any of these options workable for yourself, then refinancing may be the best for you. However, if you don’t see yourself benefitting from the options mentioned above, or want to purchase a new vehicle, consider finding yourself a subprime lender who deals with credit-challenged individuals and presents good offers.
Get the car loan you need with CarLoanRefinancing.
If you find yourself unfit for refinancing, or if it isn’t the best option for you, consider trading in your vehicle with something that is relatively more budget-friendly.
Is finding the right lender difficult for you? At CarLoanRefinancing, you can find reliable dealerships throughout the nation. We have all the resources to deal with bad credit auto loans. Besides, we can also help you trade in your vehicle when necessary.
Refinancing with us is simple. You have to fill out our cost-free auto loan request form and get started on refinancing right away!