Consumer Car Buying Advice Blog

One option that bad credit customers have in today’s market is the ability to refinance a car loan in order to reduce the monthly payments. There are a number of advantages that this option can offer all owners, even those with a checkered credit history.

Why refinance?

Here at Auto Credit Express, we find ourselves fielding more calls than usual on the topic of bad credit auto refinance. With gas prices rising, many people find that they are having problems making the payments on their cars. Compounding the problem is the fact that many of these same people may have missed a payment or were forced into making late payments because they needed to spend more money putting gas in these same vehicles – money that normally would’ve gone towards their monthly payment.

Refinancing a car can accomplish a number of things. It can lower your monthly payment, it can prevent your car from getting repossessed and it can start you back on the road to reestablishing your credit.

Lower your monthly payment

Even with the higher rates that many bad credit lenders charge, refinancing your car can lower the monthly payment. This is due to the fact that, in the process of refinancing, the number of payments is stretched over a longer time period. If you currently have 36 months left on your payment schedule, a refinance could extend this period to 48 or even 60 months. Although it will take longer to pay off your car, the lower monthly payment means you have more money left in your budget for gas and other essentials. It also means a lower likelihood of a late or missed payment.

Lower the chance of repossession

With a lower monthly payment, you are more likely to make payments on time. Making timely payments means no repossession. You still have your car so that you can drive to work.

Reestablish your credit

In many instances, a bad credit auto refinance can help you get back on track and improve your credit and FICO score. If you’ve had any late or missed payments in the past, due to a high monthly payment, you can begin to raise your credit score with your new loan. Since the lending companies that offer auto refinance also report to the credit bureaus, your new payments are all reported to the credit bureaus. By making these payments on time, you will begin to raise your credit score and reestablish a history of on-time car payments.

The Bottom Line from Auto Credit Express

If your current car payment is too high, one of the options you may have is refinancing your current loan. Even if you have poor credit, a bad credit auto refinance may be a possibility – something that makes more financial sense than repossession. Not only can you lower your monthly payment, you can also begin rebuilding your credit at the same time.

Tags: bad credit car loan, ford

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