It is possible to get help with refinancing if you have a bad credit auto loan but are having difficulty keeping up with your payments – but only if you and your vehicle meet a few requirements first. Check out this article to find out if you are eligible for refinancing and how it works.
Is it Beneficial to Refinance My Auto Loan?
In most cases, refinancing will result in a new loan for your vehicle, which should have better rates and terms, thereby lowering your monthly installment payment. It is possible to lower your monthly payment by refinancing a car in one of two ways: by qualifying for a new loan with a lower interest rate, or by qualifying for a new loan with a longer repayment term.
As a result of lowering your interest rate, you will save money on your monthly payment and over your loan’s term, as a lower interest rate translates into lower interest charges. Alternatively, if you choose to extend your loan term, you will benefit from lower monthly payments in the short term, but you will pay more in the long run because your interest rates will rise as the loan term is extended.
Do I Qualify for Auto Refinancing? What Documents Do I Need to Submit?
A bad credit auto loan does not allow you to refinance your vehicle the same day you take out the loan. You must typically wait at least a year before applying, and your credit score must have improved since you took out the loan to be considered.
You must take into consideration a few aspects of your vehicle before proceeding with refinancing if you meet both of these criteria:
• What is the age of your vehicle? – Lenders will only refinance vehicles that are less than a certain number of years old. Cars older than seven to ten years are generally ineligible for financing, although the exact age limit varies from lender to lender.
The car has been driven a certain number of miles, so please tell us. Lenders have mileage requirements for refinancing, just as they do for age restrictions. In most cases, vehicles with more than 100,000 miles on them will be ineligible for refinancing purposes. The mileage thresholds set by some lenders are higher, while many others have lower thresholds.
• Are you in arrears with your bills? If you are not current on your loan payments, refinancing is not an option. If you are behind on your monthly payments, lenders will not refinance your loan.
What is the value of your car? If you’re looking to refinance an auto loan, you can’t be in over your head. In the case of negative equity, you owe more money on your loan than the car is worth. The value of your car must be at least as high as the amount owed on your loan before you can refinance it.
The benefits of car loan refinancing are numerous, but it is typically only available to those with excellent credit. If you’re working on improving your credit, you shouldn’t rule out refinancing as an option.
When you have bad credit and want to refinance, your current lender is a good place to start. They may allow you to refinance an auto loan if you’ve kept your loan in good standing and have a good working relationship with the lender.
A new lender will need to be found in your current one cannot be found, which may prove difficult. Although it is the most common option for lowering payments, refinancing is not the only one available to those with less-than-ideal credit.
Being Provided with the Assistance You Need with a Bad Credit Auto Loan
However, if your credit history prevents you from qualifying for a refinance, you are not without options. You may qualify for a better loan on a different vehicle if you’ve kept up with your payments and built up your credit history. If you work with the right lender, you might be surprised at how much you can get for a newer car – or even a higher-quality certified pre-owned vehicle – if you shop around.
When it comes to financing a new vehicle, working with a lender who specializes in bad credit auto loans can make all the difference..
Don’t put off getting a better auto loan any longer – simply complete our no-obligation auto loan request form to get the process started right away!