Can You Refinance a Car With Bad Credit?
Refinancing a car with bad credit is not impossible, but it can be a challenge for borrowers with lower credit scores. If you’ve taken out a subprime auto loan, your interest rate is likely to be high. Refinancing can lower your interest rate and save you money. Here’s how.
Check the refinancing requirements. To keep the car you love and get a new car loan with new terms, you need to meet the credentials of the lender. This can be your existing lender or a new one.
All lender requirements vary, but in general your credit should be either good (around 670 or better) or better than when you took out your loan. Most refinances are reserved for borrowers with good credit. However, if you initially took out a subprime auto loan with bad credit, your credit has improved, and you’ve kept your loan up to date for at least a year, you may be in the running to save some money. money by refinancing.
Is your car eligible for refinancing? Your vehicle must also meet certain specifications. As a general rule, a car should be in good condition, not be too old, and travel less than 100,000 miles. Most lenders also prefer to refinance auto loans that are neither too recent nor too close to being paid off. Many require that you be up to date on your loan and not in a negative equity position.
Advantages and disadvantages of refinancing. Refinancing replaces your current auto loan with a new one. It has its advantages like keeping your car and saving money on your monthly payments. You could even increase your credit score if you are responsible for your loan.
To save money on your monthly car loan, you can lower your interest rate, extend the term of your loan, or both. To save overall, make sure you’re getting the lowest interest rate possible. If you only extend the term of your loan without lowering your interest rate first, it can cost you more overall.
When you need to refinance your car loan with bad credit but don’t know where to turn, we want to help. Auto Express Credit works with an extensive network of vendors ready to help you with your refinancing needs. Our auto loan refinance application form can put you in touch with a refi lender near you.