Auto loan refinancing targets to help you save a hefty sum of money from your monthly loan payments. Borrowers who took out a bad credit car loans are most likely to save some cash as well.
An Outlook on How Refinancing Saves Your Money
Borrowers who aim to refinance their auto loans are probably searching for ways to cut down their monthly car payments or lower their per-month interest charges. Typically, a bad credit score results in higher interest rates, but you also have another option. Try improving your credit score, so you can be eligible for a loan with a lower interest rate.
Generally, two methods will help you save money by refinancing your vehicle. They are:
By taking out a loan that has lower interest charges
Or
By getting an extended car loan.
Bad credit car loans borrower often find their interest charges in four digits. It will lead to a pile of heavy interest charges. Take a look at this table to understand how much interest you may be paying and how the loan term may affect your actual rate:
| Car’s selling price | Term of loan | Interest rate | Interest charges |
| $12, 000 | 60 months | 15% | $5120 |
| $12, 000 | 72 months | 15% | $6269 |
| $12, 000 | 60 months | 10% | $3289 |
The most common and ideal way that helps you refinance is finding a new loan with lowered monthly car payments. Generally, lots of these charges add up and result in a large amount that costs more than the vehicle. However, extending the loan term at the current interest rate will put you in tight shoes, and you will not succeed in saving any cash.
Both options of refinancing are workable for different people. Some people refinance with a long-term loan with lowered interest rates. Regardless of the situation, it helps you save money, depending on your new loan terms.
How To Refinance My Car?
To refinance your auto loan, you must look for a new lender. It may be an online lender, a new lender, or the same previous one. Borrowers search for different lenders to find a suitable one who agrees on lowered interest rates and extending the loan term.
Coming towards requirements, you must have good credit even if you took out the original loan with a bad credit score. The lenders would most likely lend you the loan if your credit score is good now or has significantly improved. Even if it’s not perfect, it will help you meet the eligibility requirements for auto loan refinancing.
Remember, having a good or better credit score is not a free pass to loan refinancing. Other requirements vary from lender to lender. However, here is a list of the top four objectives that are a must:
- You are currently paying your monthly car payments while having a good payments record.
- Your vehicle is not older than 10 years and has a mileage of less than 100 000.
- You have put equity in your car.
- You have had the original auto loan for a one-year minimum.
If you consider yourself fulfilling all of these requirements, then start applying for loan refinancing. You can also use our free online car loan refinancing form to get enrolled. Our trustworthy partners will give a helping hand to find a suitable lender for your car refinancing with bad credit.
On the contrary, if you consider your vehicle unfit for refinancing, then consider trading in. Even if your credit score isn’t good, it is another workable route for you. For this purpose, you may need to consult a subprime auto lender.
Connect With Dealerships and Subprime Auto Loan Lenders
Bad credit car loans might make things miserable for you. However, subprime auto lenders consider other important factors besides just your credit score/history. They are more likely to analyze your stability, current income, willingness to pay off the loan, etc.
CarLoanRefinancing is known for providing services nationwide with the help of dealerships that are interconnected with a large number of subprime auto lenders. If you desire to connect with the nearest dealership, feel free to fill our car loan request form.