My Car Payment Is Too High, What Can I Do?

My Car Payment Is Too High, What Can I Do?

Have you taken out a bad credit auto loan and can’t keep up with its monthly payment? Don’t worry! There is always a way out. If you end up meeting all the requirements for refinancing, you may qualify for a loan with better loan terms and a lower interest rate. If your car payment is too high and wondering what you can do about it. Read this blog to know how to lower your monthly car payment.

Refinancing your auto loan 

The first and foremost condition of refinancing is to wait for some time to pass. You have two options to choose from; refinance with your current lender or find a new lender. 

If you end up getting approved for refinancing, you can refinance through two options:

  • Get a loan with a lower interest rate. 

If you took out a car loan with bad credit, you get a loan with high-interest rates. Therefore, it will be hard to stay caught up with monthly payments. However, if your current credit score is good enough, you can qualify for a lower interest rate loan. In this way, you can lower your monthly payments and thus save a hefty sum of money over the lifetime of your auto loan. It is such a win-win situation that you shouldn’t miss it at all!

  • Stretch out the loan’s term

If you couldn’t improve your credit score or didn’t qualify for your desired interest rate, you can extend your loan’s term. It means that you will be paying for additional amounts, so each month’s payment will increase. Stretching out the loan does work great for reducing the monthly payments, but you will be paying additional interest charges on the car loan. 

Both above options greatly help reduce the monthly payments but make sure to choose the one that fits your current situation the most. 

The right time to refinance a car loan

When is the right time to refinance my bad credit auto loan? Generally, it depends on you, the vehicle, and finding the right lender. There are some perfect moments when you should consider refinancing, but there are some worst moments to refinance as well. As mentioned earlier, it is better to refinance when your credit scores improve, your financial situation gets better, and some time has passed. The reason is that you will get great deals by choosing the right time. 

Now, let’s take a look into the worst times/situations to refinance your auto loan. First up, we have rushed with refinancing. Don’t rush to refinance within a year since you took out the original car loan because your lender is less likely to accept you for refinancing. Because there is a lack of payment history and thus, the lender cannot evaluate your credibility. Lenders also have high requirements for the age and mileage of the car. Based on these and your loan balance amount, lenders decide whether you qualify or not. 

There are chances that on having negative equity in your vehicle, the lender will turn you down and refuse to refinance. That is why you should make sure your car’s market value is more than what you owe and make sure to cover all the extra expenses before refinancing to avoid difficulties. 

The bottom line 

Timing matters the most when considering refinancing. Consider discussing problems that you face while paying for your monthly car payment because your lender may offer you a loan with a better interest rate. But if you can’t refinance your auto loan, make sure that you don’t miss any monthly payments and give a budget-friendly payment. 

If you are looking for reliable lenders to work with, consider CarLoanRefinancing as your close partner. We have worked with thousands of dealerships that are present throughout the U.S. 

You can fill out our cost-free auto loan request form to start refinancing right away.