Can you refinance a car with bad credit?
Refinancing a car with bad credit isn’t impossible, but it can pose a challenge for borrowers with lower credit scores. If you’ve taken out a subprime auto loan, chances are your interest rate will be high. Refinancing can lower your interest rate and save you money. Here’s how.
Check refinance requirements. To keep the car you love and get a new auto loan with new terms, you must meet the lender’s qualifications. This can be your current lender or a new lender.
All lenders’ requirements vary, but in general your credit should be good (a score of around 670 or higher) or better than when you took out your loan. Most refinances are reserved for borrowers with good credit. However, if you originally took out a subprime auto loan with bad credit, your credit improved, and you kept your loan current for at least a year, you could be in the running to save money by refinancing.
Is your car eligible for refinancing? Your vehicle must also meet certain specifications. Generally, a car should be in good condition, not too old and have less than 100,000 miles. Most lenders also prefer to refinance car loans that are not too new or too close to being paid off. Many require you to be current on your loan and not in a negative equity situation.
Advantages and disadvantages of refinancing. Refinancing replaces your current car loan with a new one. It has its advantages such as keeping your car and saving money on your payments each month. You might 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 get the lowest interest rate possible. If you just extend the term of your loan without first lowering your interest rate, it may 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 providers ready to help you with your refinancing needs. Our auto loan refinance application form can connect you with a refi lender near you.