Refinancing a bad credit car loan can help you save money with a lower monthly car payment by reducing your current interest rate. It can be quite simple to refinance if you will do some research and adhere to a few guidelines.
Contrary to popular belief, you do not need to get your car appraised before refinancing. Since the refinance amount is based on the amount that you owe, not the amount that your car is actually worth, the lender is only concerned with how much money that you will need to borrow.
If you are planning on refinancing a bad credit car loan, make sure that you do not default on a payment. Your credit score should be reflective of improvements and be higher than when you originally financed the car as you have been making on-time payments.
If you choose to refinance a bad credit car loan, keep in mind that your interest rate might not be as low as someone who has a good credit score, but refinancing could substantially lower your payments.
Tips on Refinancing a Bad Credit Car Loan
If you are planning on refinancing a bad credit car loan, make sure that you do not default on a payment. Your credit score should be reflective of improvements and be higher than when you originally financed the car as you have been making on-time payments.
If you choose to refinance a bad credit car loan, keep in mind that your interest rate might not be as low as someone who has a good credit score, but refinancing could substantially lower your payments.
See if you qualify for refinancing your loan >>
Requirements for Refinancing a Bad Credit Car Loan
- Have made on time payments on any existing debts (e.g. credit cards, mortgages) for at least six months
- Have made on time payments on your existing car loan for three to six months
- Have obtained your credit repot from AnnualCreditReport.com and it is well above 600
- Have been in the same job and home for at least six months
- Haven’t had a bankruptcy for three or more years
- Have paid down your debt load to a reasonable level
- Have a car that was not manufactured more than 10 years ago (some companies will only refinance vehicles less than five years old)
- Have a car with less than approximately 70,000 miles (more with some refinance companies)
- Need to refinance between $7,500 and $50,000
- Are a U.S. Resident and more than 18 years old
- Have a gross monthly income of at least $2,000 or a co-signer
If you can meet these requirements a lender will be more apt to refinance a bad credit car loan and you will be on your way to saving money!