Applying for car refinancing can lower your monthly payments but there are also certain rules that typically have to be met in order to qualify
Consumers with less than perfect auto credit that are currently financing a vehicle through a high-risk lender may find that it’s possible to refinance it and lower their auto loan payments.
At Auto Credit Express we want you to know that if you’re considering this option it can happen, although the circumstances usually have to be just right. We know this because we’ve spent the last twenty years helping car buyers with poor credit find dealers who can arrange for approved auto loans. It’s also why we designed our website so that car shoppers with credit issues could research subjects ranging from repossession to today’s topic: refinancing options during no credit auto loans.
Car loan refinancing
Refinancing your auto loan can accomplish a number of things: reducing interest expenses by lowering the interest rate or even decreasing the monthly payment amount. Although this option is typically only available if your FICO scores are good, it can sometimes be done even if you’re in the process of reestablishing your car credit.
Lower monthly payments are usually the result of a lower interest rate – something that can also reduce your overall interest expenses. Consumers with previous credit problems typically might (it doesn’t always happen) qualify for a lower interest rate if they’ve made timely payments for anywhere from 18 to 36 months on their current auto loan, depending upon the loan term and their original credit situation.
Lower monthly payments can also be structured by extending the loan term. For example, if the current loan term has 24 to 36 months remaining on it, an auto loan refinance can add an additional 12 months or more to the loan term. Although this extends the payoff date (and typically increases interest expenses), a lower payment can free up money in your budget for utility bills and other essentials. It also can reduce the possibility of late or even missed payments.
FICO score improvements
Refinancing a high-risk car loan can also help with credit scores. Think about it: If budget-busting payment in the past caused any problems, lower payments can help boost your FICO scores by making it easier to pay your monthly payments on time. Since lenders that offer car loan refinancing also report your payments to the credit bureaus, your credit scores should improve.
The Bottom Line
If your current monthly car payment is too high, one option you may have to reduce that monthly payment (and possibly even the interest rate) is auto loan refinancing.
If you haven’t yet applied for a loan and if you have credit problems, we want you to know that Auto Credit Express can help you find a dealer for your best chance at approved auto loans.
So if you’re ready to reestablish your auto credit, you can start here by filling out our online car loans application.