My Car Payment is too High, How Can I Lower It?

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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.

, - March 25, 2019

If you’re in the middle of a bad credit auto loan and can’t keep up with the monthly payment anymore, know that all hope isn’t lost. You may be able to refinance your current loan and lower your monthly payment.

Refinancing Your Auto Loan

In order to refinance your car loan, you need to make sure that some time has passed. You can choose to refinance with your current lender, or look for another one. No matter which lender you choose, they generally like to see that at least two years have passed and that your credit score has improved before they consider refinancing you.

If you’re approved for refinancing, you have two options to help lower your monthly payment:

  1. Qualify for a lower interest rate – If you took out a bad credit auto loan initially, you most likely have a higher than average interest rate. If your current credit qualifies you for a lower interest rate, this can lower the monthly payment in addition to reducing the interest charges you pay for the rest of the loan, making it a win-win situation.
  2. Extend the current loan term – If your credit hasn’t improved much, and/or you don’t qualify for a lower interest rate, you can choose to extend the loan term. Extending the loan term lowers the monthly payment, but you end up paying more in interest charges.

Both options can make your monthly payment more affordable, but you need to make sure you pick the best option for your current situation.

The Right Time to Refinance a Car Loan

So, when’s truly the best time to refinance your car loan? It’s all subjective, but there are a few situations where it is the best time to refinance, and others where it’s the worst. As we’ve discussed before, if your credit situation has improved, or your financial status changed (either for better or worse) and some time has passed, those are the best times to refinance an auto loan.

What about the worst times to refinance? Well, if you just took out a car loan and not even a year has passed, lenders aren’t likely to approve you for refinancing since there’s not much history there. Plus, lenders have requirements for refinancing including the vehicle’s age and mileage. If your car is over the mileage and/or age limits, a lender can turn you down.

If you’re upside down in your auto loan, the lender is most likely going to turn you down for refinancing, as well. Make sure you have equity or are able to cover any negative equity before you consider refinancing.

The Bottom Line

As long as everything is timed right, you could make your monthly payment lower by refinancing your car loan. Remember, you can talk to your lender about your monthly payment situation ahead of time, and they may be able to help you so you don’t miss a payment.

While we can’t help you with refinancing, we can help you get connected to a dealership if you’re simply looking to take on a bad credit auto loan. At CarsDirect, we work with a nationwide network of special finance dealers that have the lending resources available. We want to connect you to a local dealership that can tackle challenging credit situations. Get started today by filling out our car loan request form.


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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.

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