Refinancing your vehicle is typically done to save you money, but does that savings come at a cost? Here's what you need to know about refinancing.
Refinancing means replacing the current loan on your vehicle with a new one that has different terms. There's no cost to refinance your vehicle unless the lender you're working with charges an application fee. Depending on where you live, some parts of the process may also incur a fee, such as retitling the car, but there's no flat fee. Some borrowers may also experience having to pay early termination fees, depending on how your original auto loan is set up.
When you refinance, the goal is usually to save as much money as possible on your monthly car loan payment by either lowering your interest rate or stretching out your loan term. Keep in mind that if you take out a longer loan without getting a lower interest rate, you're not saving money, just paying a smaller amount for more time.
If you want to keep your current vehicle, but are finding it difficult to pay for, refinancing might be for you. However, refinancing isn't always a sure bet. Typically, you need to meet a number of requirements in order to qualify.
Refinancing With Bad Credit
If you're suffering from bad credit it may be more difficult to find a refinance lender. But, if you initially took out a bad credit car loan and your credit situation has improved you may still be able to refinance your vehicle.
Besides a good or improved credit score, refinancing typically requires that:
- You've had your loan for at least one year.
- Your vehicle fits into the refinancing age range
- Your car doesn't have excessive miles
- Your loan amount is acceptable to the new lender
- You don't have negative equity
- You're current on your loan
If you qualify for refinancing, you could save money each month by lowering your auto loan payment. If you don't qualify for refinancing, you may still be able to save by trading in your vehicle for something more affordable.
If Refinancing Isn't Right
If refinancing isn't for you, we want to help you find a lender to work with that can help you get into the loan you need. At The Car Connection, we work with a coast-to-coast network of special finance dealerships that are signed up with subprime lenders. Let us point your way today, simply fill out our fast, free, no-obligation car loan request form.