Try This Car Refinancing Hack to Save Money

Get Car Financing
Even with poor credit.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - December 3, 2019

If you’ve got bad credit and find yourself struggling to keep up with bills like your car loan, it could be time for a fresh start. When you love your vehicle, you probably don’t want to start over with something else. You may be able to save money and keep the vehicle you love by refinancing it.

Refinancing Can Save You Money

When you refinance your car, you’re replacing your existing loan with a new one that hopefully has a better interest rate and/or better terms. The most common reason people refinance an auto loan is to lower their monthly payment.

You can do this in one of two ways:

  • Extend your loan term – If you’re having trouble keeping up with your loan payments, simply lowering the amount you pay each month may help. One way to accomplish this is by extending the loan term. This option can be a good temporary fix, but it ends up costing you more overall. When you extend the loan term, your payoff date gets pushed back, and this means you’re going to be racking up more interest charges in the long run, especially if poor credit has you at a higher than average interest rate.
  • Qualify for a lower interest rate – If you did have to get a bad credit car loan with a high interest rate, qualifying for a lower one can help you save money both in the short term and the long run. Getting a lower interest rate decreases the overall cost of the loan, which in turn lowers your monthly payment. This is the best scenario to strive for if you’re considering refinancing your auto loan to lower the monthly payment.

Qualifying for Refinancing

Let’s be honest, refinancing might seem like a good idea because spending time searching for an affordable car isn’t any fun when you’re already attached to the vehicle you have.

In this case, refinancing can come in handy – but it’s not as easy as just deciding to refinance your car. In order to, both you and your vehicle need to meet the refinancing requirements of the lender you’re working with.

The particular refinancing requirements vary by lender. In order to qualify for refinancing, you generally need to be current on your loan payments and your credit score must have improved since you took out your original loan.

If you’re able to qualify for refinancing, you also have to make sure that your car does. If your vehicle doesn’t meet all the lender’s qualifications, you aren’t going to be able to refinance. Typically, car requirements include:

  • There must be equity in your vehicle
  • Your car has to fall within the lender’s acceptable age and mileage range
  • The loan amount has to be acceptable to the new lender

It could be difficult to qualify for refinancing with less than good credit, but if you’ve kept up with your loan payments and have improved your credit score since you first took out the loan, you may still be able to – as long as you’re working with the right lender. Sometimes, you can do this with your current lender, but people often refinance with a new one.

Is Refinancing Right for You?

If you’ve decided that this sounds like a perfect fit for your situation, then you need to find the right lender to help you refinance your vehicle. We can help get you connected to a refinancing lender through our trusted partner.

However, if you’re unsure about whether you or your car can qualify for refinancing, it might be time to shop for a more affordable option. That’s where we come in. Here at CarsDirect, you can shop for new and used vehicles, or we can connect you to a special finance dealership in your area that works with lenders that finance people in tough credit situations.

Want to get connected to local dealer to get your journey toward a new auto loan started? Just fill out our no-cost, no-obligation car loan request form, and we’ll put our expertise to work for you.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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