A bad credit car loan made it possible for you to secure your dream car. With a stable job and another source of income, you have managed to pay your car finance regularly and ahead of time, building your credit positively in the process. You have better control over your finances and even managed to eliminate debts on your credit file.
Do you think you deserve more?
Yes, you do – through a car loan refinance.
Car loan refinance are available both for regular borrowers and people with bad credit. Through a refinance, you can get a better interest rate than the one that you had on your initial bad credit car loan.
How to Qualify for a Bad Credit Car Loan Refinance
Responsibly pay off your car loan monthly payments in full and on time to create a good impression on your credit history
Eliminate as much debt as you can. The least debts you have, the more extra money you’ll have to save or afford a better car or any other personal need you might see fit.
Create several sources of income or ask for a generous increase in your pay
A steady source of income is always considered as a low-risk client for banks. The higher this steady income is, the better deals you’ll have access too.
Pay your other monthly dues on time
You might have been religiously paying for your car loan on time, but how about your other financial obligations? Multiple defaults can damage whatever good you have put into paying for your car loan in full and on time. Do the same with your other monthly dues such as phone lines and other utility bills.
Revisit and review your credit report for possible errors and items that can be removed from your file
Some of the items you can look at are the following:
- Late payments remain on your credit report 7 years after the date of the missed payment
- Collection and charged accounts stay for 7 years in your report after the first payment missed is reported to Equifax by your creditor
- Bankruptcy records last up to 10 years, depending on the type of bankruptcy filed.
- Negative accounts stay up to seven years after the date of the first missed payment
- Active accounts paid as agreed remains on your file as long as the lender is reporting it
- Closed accounts paid as agreed remains on your report up to 10 years after the lender reports it as closed to Equifax
Advantages of a Bad Credit Car Loan Refinance
If you have ticked most of the qualifications for a bad credit car loan refinance above, you can consider yourself as a borrower with a correctible credit. Here are some of the advantages you might enjoy in a car refinance.
Better Interest Rates
The interest rates improve as your risk as a borrower decrease. Check if a refinance could give you access to a lower interest rate making it easier and faster for you to pay for your loan.
It May Help Increase Your Cash Flow
If you still owe $5000 for your auto loan and get a refinance amounting $7000, you’ll be able to pay for your auto loan balance and have an extra $2000 to be spent on your other needs.
Lower Monthly Payments
A refinance can be applied with a longer loan term, thus easing you with a few hundred dollars monthly in payments that can be allocated elsewhere on your budget.
A bad credit car loan refinancing is not essential but can be beneficial, depending on the prevailing rates in the market and your credit-worthiness as a borrower. Interested in refinancing a car loan or even a home loan? Talk to an Intellichoice loan specialist. We are ready to help.