Are you having a hard time repaying your car loan, or would you simply want to trade or finance a new unit? You can simply refinance a car loan to be able to get a new car or to get a more favorable interest rate and feature for your loan. But what if you suffer from bad credit? This article may help.
There are options available for you to refinance a car loan even with bad credit. There are certain lenders that facilitate clients who would want to refinance an auto loan.
Why Do You Need to Refinance a Car Loan?
Avail lower interest rates
The current interest rate that you may have been paying for with your current car loan may not be higher than the prevailing interest rates in the market. If you would want to save a few hundred dollars on current monthly payments, a refinance might be a good idea.
Lower monthly payments
Lower interest rates help in reducing your monthly repayments. Although, it is important to check if there are fees including in terminating your car loan early and then reverting to a refinance. A car loan specialist from Intellichoice Finance can help you understand more about the process and which option would be favorable to you financially.
Trade your car to a new make or model
If you are planning to upgrade your current vehicle to a new model or a different brand, a car refinance would be ideal for you. It is advisable to apply for a car refinance, earlier than sooner if you would want to upgrade to a more high-end vehicle so the value of your current automobile would be higher. The longer you hold of your car refinancing the less the value of your current vehicle will be.
What to Do When Applying for a Car Refinance with Bad Credit
Review your credit file and credit score
Your credit score and credit file still matter even when applying for a bad credit car loan. Non-conforming lenders will check how you came about such status on your credit file. Unlike regular banks and lenders, non-conforming lenders believe in second chances and will help you secure financing despite your credit history. A bad credit rating is not the end of your application. Understanding how you arrive at such circumstance is a priority for most lenders.
Coordinate with a car loan specialist
A car loan specialist can help you understand your financial circumstance and if you can qualify for a bad credit car loan. What’s good with asking help from a loan specialist is that no inquiry is posted on your credit file. If you failed to qualify during the assessment of your requirements for a bad credit car refinance, it will not appear on your credit file and will not do any further damage on your credit score.
Compile a list of possible options for car finance
There are literally hundreds of possible banks and lenders you can apply for a bad credit car loan. You can save thousands if you find a loan suitable to your needs. You can compile a set of free quotes you can obtain online to be able to compare.
If you aid the use of a car loan specialist, you can ask them to compile a list of possible options for you, together with each’s advantages and disadvantages. If you would really want to fully understand the options available for you, a loan specialist would be ideal to make the process of comparing easier.
Improve your credit score
It would be ideal to wait for items in your credit report to be removed prior to applying for a bad credit car refinance. However, you should be smart in choosing which items to be removed. Accounts that have been paid regularly and in full would be a good credit history your credit file could boast for. Keep the good accounts and try to remove the ones that are indeed bad for your credit history.
Waiting for a bankruptcy to be removed for a month or so would be favorable for your refinance application. Get rid of outstanding debts to increase your chances too.
Qualifying for a car refinance with bad credit score would also be beneficial for your credit history if you religiously pay for your loan on time.
Why Consider Applying for a Car Refinance?
Financing a car refinance with bad credit may be challenging for people with bad credit but is not impossible. The main key to increasing your chances for approval is improving your credit score. The application process may take time but every step is essential.
It would also be ideal to refinance a loan if the interest rates for car loans have dropped – meaning a lower monthly payment to pay for. Watch out for hidden fees and the possibility of a longer term on your refinance.
There is no specific time frame necessary to apply for a car refinance with bad credit. Take your time comparing to be able to arrive with the best possible result and circumstance for your financial situation.
