An option that many bad credit customers may have is the opportunity to refinance a car loan in order to reduce their monthly payments
Bad credit auto refinance
If you have bad credit, you're currently in a bad credit auto loan and, for whatever reason, you're beginning to have difficulties making those monthly car payments on time, you may be wondering if it's possible to refinance your current loan. We've seen this situation before here at Auto Credit Express because we've been working with credit-challenged car buyers for over two decades.
In fact, knowing the embarrassment and frustration that customers with bad credit potentially face, we even developed a web site to accept bad credit auto loan applications and match up these customers with local dealers that specialize in customer credit issues.
The alternative, buying a vehicle from a tote the note, we finance anyone car dealer, can be a problem because these dealers usually don't report your payments to the credit bureaus. On the other hand, taking out a loan with a bad credit lender through a dealer without knowing what you're doing can also create problems. In either case, the end result could be vehicle repossession.
Chances are, if you're caught in a financial bind, you might find it difficult negotiating a loan modification with a tote the note dealer. But if your current loan is a bad credit car loan financed through a national lender, do you have any options at this point?
Lower your payment
Recently we've found that we're answering more questions than usual on the topic of auto refinance with bad credit. Given the slow recovery of the current economy, many people are finding that they are having problems making their car payments on time. In many instances these individuals may have missed a payment or were forced into making late payments because they were laid off or had their hours reduced, cutting back on their pay – money that normally would've gone towards their monthly car 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 prevent your credit scores from falling any further.
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 remaining payments will be increased - stretching the new loan over a longer time period.
For example, if you currently have 36 months left on your payment schedule, a refinance could extend this period to a total of 48 or even 60 months. Although it will take longer to pay off your car, the lower monthly payment means you'll have more money left in your budget for utility bills and other essentials. It also means a lower likelihood of a late or missed payment.
Requirements for a bad credit auto loan refinance
There are a couple of things that you'll need to consider even before you attempt to refinance your current loan:
1. The vehicle you plan on refinancing has to book out. In other words, you can't be “upside down” in your current loan – the vehicle you're currently financing has to be worth more than you currently owe on it.
2. You should be current on your current loan payments. This means that you need to start looking at a bad credit auto loan refinance before you start falling behind on payments. If you're currently 30, 60 or 90 days past due on your loan, it's going to be very difficult trying to find a lender that will refinance it.
The Bottom Line
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 continue to rebuild your car credit, since the lenders that offer auto refinance will also report your payments to the credit bureaus.
If, on the other hand, you are looking for a second chance car loan, keep in mind that Auto Credit Express has helped thousands of people with bad credit buy cars and reestablish their auto credit. Our national network of affiliate dealers specializes in bad credit car loans. Since our inception, we have processed over 1 million online bad credit auto loans and our dealers have closed over $2 billion in auto loans.
So if you are serious about getting your credit back on track, why not begin a new chapter in your life by filling out our bad credit car loan application now.