Refinance your car with bad credit
You Can Refinance Your Car with Bad Credit
In the latest economic down turn, millions of
families have had to find ways to cut their expenses in order to
live on less income. American citizens and people all over the world
have down sized their homes, reduced their spending to include
necessities only, cook meals at home rather than eat out and cut
other living expenses wherever they can. Few think of reducing their
monthly car payments by refinancing their car loan because of their
Is it possible to refinance a car loan with bad
credit? If so, how difficult is the process?
Many people are familiar with refinancing a mortgage
loan, but refinancing a car loan isnít as well known. This type of
loan is actually simple and easy for people with a good credit
rating, but considerably more difficult to get for those with bad
credit. Any subprime (high risk) loan requires more than the usual
protective measures to reduce risk of default for the lender. Yet
bad credit car loans are refinanced dozens of times a day.
Lenders are willing to make these loans because the
car serves as collateral and car owners will desperately do whatever
it takes to keep their cars. Transportation is not a luxury but a
necessity in todayís society since public transportation is not
What are Good Reasons to Refinance a Car Loan?
There are 5 particularly good reasons to refinance a
car loan with bad credit:
- The most obvious reason is to reduce monthly payments. Reduced
car payments frees up money for other expenses and obligations. Be
aware that the terms of the refinance may have you paying much
more for your car because of an increased interest rate and a
longer payback time.
- You can use refinancing as a means to improve your credit
rating. Making your payments every month and on time helps
substantially. Some lenders who specialize in helping consumers
improve their credit rating will report your timely payments
monthly to one or more credit bureaus.
- When interest rates are much lower than when you first
financed the car is a good time to refinance. This is an important
area to watch. You may need to pay a higher interest rate than
before if you have a lower credit score than before.
- If you credit rating has improved since you first financed
your car, you may qualify for a lower interest rate that will
reduce your monthly payments. Make sure that the term of the loan
isnít increased to the point that youíre paying more for your car
than ever before.
- Whenever you need lower monthly payments is a good reason to
investigate the possibility. Youíll find lenders to be more
flexible when the number of applications for refinancing is down
which can happen almost anytime. If you donít have an immediate
need for refinancing a car loan but youíll be pursuing this option
in the near future, start the application process early to hunt
for the best deals.
Lenders are refinancing auto loans every day as
awareness of this method grows. Reducing monthly payments is the
most popular reason for this type of loan and at the same time it
can help to improve your credit score. You can also improve your
credit score by using the money you save on car payments to reduce