Requirements to Refinance a Car

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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.

, - April 15, 2019

If you’re considering refinancing your current car loan, what are the requirements you need to meet? In addition to having good credit, there are five other requirements you need to satisfy if you want to get approved for refinancing.

Refinance Requirements

Auto refinancing is simply replacing your current car loan with another, usually more affordable loan with a better interest rate or longer term. Lenders typically like to see that around two years have passed before they’re willing to approve you for refinancing.

You can either check with your current lender or find a new lender to refinance your loan. No matter which route you take, you need to meet the requirements – not just anybody can refinance an auto loan.

The requirements to refinance a car loan generally include:

  1. Being current with payments – You need to be current with your car payments. If you’re not, lenders are going to turn you down.
  2. Not being upside down – Make sure the vehicle you’re financing is worth more than what you owe on the loan. If it’s worth less, then you’re upside down, also known as having negative equity, and lenders aren’t going to refinance a car that’s upside down.
  3. Making sure your vehicle qualifies – Lenders have specific car requirements when it comes to age and mileage. If your vehicle is too old or has too many miles, they may turn you down.
  4. Being sure the new loan falls within the lender’s guidelines – Make sure the balance that’s to be refinanced fits within the lender’s acceptable range.
  5. Ensuring your car has a clean title – What this means is that you should make sure the vehicle you want to refinance doesn’t have a branded title, such as salvage or rebuilt, and isn’t a commercial car.

Refinancing with Bad Credit

If your credit hasn’t improved much since taking out the initial auto loan, you may be wondering if it’s possible to refinance with bad credit. In some cases, a lender may approve you for refinancing if your credit isn’t in good shape, but you shouldn’t count on it.

In most cases, a lender isn’t going to approve you for refinancing if your credit is poor. The good news is you can take steps toward rebuilding your credit and refinancing a loan down the road.

It’s going to take some time to build up a good credit history, but as long as you keep up with your monthly bills by paying them on time, you should see your score improve. Once some time has passed and your credit score and reports are in better shape, you can consider refinancing your car loan.

Looking for Auto Financing?

If you’re interested in refinancing to get a lower interest rate or monthly payment, CarsDirect is partnered with RateGenius to help consumers along the way. On the other hand, if you’re here because you need an auto loan, we want to help by connecting you to a local dealer.

At CarsDirect, we specialize in helping credit-challenged consumers get matched to the right dealership for them so they can get the financing they need. Getting started is simple, just fill out our free car loan request form, and we’ll get right to work connecting you!


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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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