How To Secure An Auto Refinance With Bad Credit

Warning: you may not like what I have to say in this article.

There aren’t a lot of reasons why you would want to use an auto refinance when you have bad credit. For one thing, the whole point of refinancing a loan is to get a better interest rate. However, I can think of one good reason and here it is: you might simply want to lower your payments by extending the length of your loan.

I’ve been paying on my auto loan for more than three years now. I took out a loan of about $25,000 and now only owe $10,000 on it. I’ll be done paying it off in a little less than two years. Since I only owe $10,000 on the vehicle I could refinance for a four or five year term (the bank would probably want me to do four) and lower my payments by quite a bit. I would of course have to make the extra payments.

My payment right now is almost $500 but I could probably get them down to about $200 with a refinance. Of course my credit is solid so I would have a good interest rate. If you had to use bad credit auto refinance loans you would have a higher payment on the same loan amount.

Securing An Auto Loan Refinance With Bad Credit

The method that you’re need to go through to secure an auto refinance will depend entirely on how bad your credit is. If you’re above 650 you’ll be able to secure the loan by yourself. Most banks would be glad to have you. Those of you that have a credit score below 650 will have to have some help to be able to secure the loan.

Finding a cosigner usually isn’t the easiest thing in the universe to do, but it can definitely be done. Ask family first because they will be the most likely to be able to and want to help.

If you aren’t able to find a cosigner, you’ll need to get your credit cleaned up. One of the most damaging things to your credit score is when you have high balances on credit cards. 30% of your score is calculated by looking at the balances you carry on your lines of revolving credit. That means that you could lose over 200 points if you have maxed-out cards. Paying them down in this situation will make a huge difference to your score. That way you’ll be able to walk into a bank and secure an auto loan on your own.