Wondering if you can refinance a car if you are behind on payments? Well, the first and foremost condition of refinancing an auto loan is to be current with your monthly car payments. Unfortunately, if you are not, then you may lose your chances of refinancing. However, contacting your lender will help you find the right solution for you, and eventually, you will be able to refinance your car.
How your lender can help you
If you happen to be behind your monthly car payments, you should contact your lender immediately. Mostly, lenders are willing to cooperate and work with you if you explain your situation well. Honestly, lenders avoid loan defaults because they cost them a hefty sum of money.
Your lender may have a few varying options to present you regarding your vehicle, loan, and refinancing. For this purpose, you have to reach out to them and give them a call. Generally, lenders allow the borrowers to defer payment when things are not working well. A deferment is a means by which you can skip/delay a payment that is already due or late. However, these payments are included at the end of your loan.
Another option that may work for you is forbearance. It is where the lender permits you to pause the loan for a short time. Lenders may also lower the monthly payment during the forbearance period. Every lender has varying options, and to avail of these temporary options, you have to call your lender.
How refinancing helps lower monthly payments
You can refinance a car if you are behind on payments. Consider going through the refinancing process after getting caught up with your payments. It will help lower your monthly payments and make it easy to keep up with the current payments. Refinancing means replacing your original auto loan with a new one. The refinanced loan usually has a lower interest rate or has an extended loan term.
Auto loan refinancing is a means to lower your monthly car payments and save money from the auto loan. You can do so in the following two ways:
- By stretching out the loan term
- By lowering the interest rate on the loan
Lowering the interest rate is the ideal option, and one should aim for it. It is even more necessary for you to take out a loan with a bad credit score. Stretching out the loan term works to lower monthly payments, but it increases the total amount of the loan over its lifetime.
Refinancing is done with a new lender, but you can also contact your current lender to see if they have any options available for you. You must have to meet a specific set of requirements to qualify for refinancing.
Every lender has varying requirements, but here are some typical demands:
You must have an improving credit score
It is acceptable if you took out the original loan with bad credit. But there should be a significant improvement in the credit score to qualify for refinancing.
- Your vehicle should be fit.
Every lender has set requirements for the vehicles regarding age and mileage. They may vary, but ideally, your car must have a mileage of fewer than 100 000 miles and should not be older than ten years.
- You must have equity in your vehicle.
Having negative equity in your car would prevent you from refinancing. It means that you owe more than what your vehicle is worth. That’s why you must have equity.
- The loan amount has to be acceptable.
Your loan amount must fit in the lender’s maximum and minimum balance range. Or else you would have to find another lender.
Find a lender with CarLoanRefinancing.
CarLoanRefinancing is not a lender, but we have all the resources to help you through your refinancing process. We will connect you with a suitable refinancing partner who will offer you the best deals.
We are in contact with thousands of nationwide dealerships that aid individuals facing credit problems. Complete our auto loan request form to get connected with one of them!