Can I Refinance My Auto Loan?

If you took out a bad credit auto loan but are struggling to keep up with your payments, refinancing might be able to help – but only if you and your car meet a few requirements first. Let’s look at how refinancing could help you, and what it takes to be eligible.

What Does Refinancing My Auto Loan Do?

Can I Refinance My Auto Loan?Refinancing replaces the current loan on your vehicle with a new one – hopefully with better rates and terms that reduce your monthly payment. There are two ways you can refinance a car that help you lower your monthly payment: by qualifying for a new loan with a lower interest rate, or by qualifying for a new loan with a longer term.

Lowering the interest rate saves you money on your monthly payment and in the long run, as a lower interest rate means lower interest charges over the term of your loan. If you extend your loan term, on the other hand, you get the benefit of a smaller monthly payment, but it’s costing you more in the end since the interest charges actually increase due to the longer loan term.

How Do I Qualify for Auto Refinancing?

If you take out a bad credit auto loan, you can’t turn around and refinance your vehicle right away. You typically must wait at least a year to be eligible, and your credit score has to have improved since taking out the loan.

If you meet these two qualifications, you need to consider a few things about your car before you jump into refinancing:

  • How old is your car? – Lenders only refinance vehicles that are under a certain age. Exactly how old a car can be depends on the lender, but vehicles over seven to 10 years old generally aren’t going to qualify.
  • How many miles are on the car? – Like age restrictions, lenders also have mileage requirements for refinancing. Vehicles with over 100,000 miles are typically going to be ineligible to refinance. Some lenders have higher mileage thresholds, although many also have lower mileage limits.
  • Are you behind on payments? – If you’re not up to date on your loan payments, refinancing isn’t going to work for you. Lenders don’t refinance loans if you’re behind on monthly payments.
  • Is there equity in your car? – If you’re looking to refinance an auto loan, you can’t be upside down. When you have negative equity, you owe more on the loan than the vehicle is worth. Lenders don’t refinance cars unless they’re worth at least as much as you owe on the loan.

Refinancing comes with many benefits, but is typically reserved for people with good credit. Luckily, refinancing isn’t out of the question if you’re working toward credit improvement.

When you have bad credit and want to refinance, a good first place to start is with your current lender. Sometimes, if you’ve kept your loan in good standing and have a good relationship with them, they may allow you to refinance an auto loan.

If not, you’re going to have to find a new lender to work with, which could be difficult. However, refinancing isn’t your only option for lower payments even with bad credit.

Getting the Help You Need with a Bad Credit Car Loan

When you’re unable to qualify for refinancing due to bad credit, you’re not out of options. If you’ve kept up with your payments and improved your credit, you may qualify for a better loan on a different vehicle. You might be surprised what you qualify for in a newer car – or a better quality certified pre-owned vehicle – as long as you’re working with the right lender.

Working with a lender that specializes in bad credit auto loans can make a world of difference when it comes to financing another car. Not all lenders can do this, but here at The Car Connection, we know how to find the ones that can. We work with a nationwide network of special finance dealerships that have the lending resources you’re looking for.

Don’t hesitate any longer to get a better auto loan – simply fill out our no-obligation auto loan request form to get the process started right now!


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