Can You Refinance a Car Loan with Bad Credit and Late Payments?

Get Car Financing
Even with poor credit.

By

Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - June 25, 2019

In order to qualify for auto refinancing, you typically need to make sure that at least a year has passed since taking out the original loan, and that your credit score improved. This means you shouldn’t have any missed payments show up on your credit reports. If you do, your credit probably won’t be better, and qualifying for refinancing is going to be extremely difficult.

How to Qualify for Car Refinancing

Sure, waiting a year and seeing your credit improve is part of qualifying for car refinancing, but there’s more to it than that. Refinancing is when you take your original loan and replace it with, most of the time, a better one. You need to meet the lender’s basic refinancing requirements, which include being current with all your monthly payments, no negative equity (owing more than the loan balance), and a vehicle that meets their age and mileage requirements.

Where should you go to refinance? First, you should check with your current lender to see if they’re able to refinance your loan. Whether they can or can’t, you should rate shop and see what other lenders offer. This way you can compare and pick the best deal.

How Refinancing Your Car Helps You

Now that you know what it takes to qualify, what exactly can it do to help you? The biggest – and really only – benefit is that it helps you lower your monthly payment, and potentially save in interest charges.

There are two ways you can save money when you refinance:

  1. Qualify for a better interest rate – This is the ideal option, because not only do you lower your monthly payment, you also lower the total interest you have to pay.
  2. Extend the loan term – This is only ideal if you’re going through a temporary financial struggle and need to make the monthly payment more affordable. You end up paying more in the long run when you extend the loan, but once you’re back on your feet, you can always pay more each month to complete the loan more quickly.

The Bottom Line

Bad credit auto loans can be costly, thanks to their higher than average interest rates. Down the road, as long as you make all your payments on time and check that your credit is better, you may be able to refinance for a better interest rate and save money.

Here at CarsDirect, we can assist you with refinancing if you’re having trouble getting the process started. We can also help you get connected to a dealership that has the lending resources you’re looking for. We work with dealers across the US that have the lenders available to work with people dealing with credit challenges.

Getting the process started is simple. Fill out our free and quick car loan request form, and we’ll get to work matching you with a local dealership!

Need a Car Loan?

It only takes a minute.

Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


Search New Cars by Loan Payment »

View estimated loan payments based on local rebates and financing offers.

Loan approval is not guaranteed and is subject to credit application and approval of the lender. Individual loan terms may vary. Use of this website constitutes acceptance of CarsDirect.com's Terms of Use, Disclaimer, Privacy Policy, and Cookie Policy.

Privacy Policy|Terms of Use|Cookie Policy|Disclaimer
COPYRIGHT 1999-2019 MH Sub I, LLC dba CarsDirect.com