If you have a cosigner on your car loan, but it's proving too expensive, you can still refinance with a cosigner. However, if you feel like you don't need a cosigner any longer and you want to go it alone, refinancing can help, too.

Refinancing Your Car

Refinancing is when you replace your current auto loan with a new one on the same car. If you had poor credit when you started your auto loan journey and needed a cosigner, you can choose to either keep them on the loan or remove them.

However, in order to remove a cosigner and go it alone, your credit score has to have improved before you can refinance. In fact, cosigner or not, refinancing a bad credit car loan usually takes an improved credit score – and this is just one requirement.

Generally, the requirements to refinance a vehicle are all pretty standard among refinancing lenders, though the specifics vary. Typically, the requirements are:

  • Having had the loan for at least one year
  • Having a good or improved credit score
  • Having a car that meets lender requirements
  • The loan amount must be within the refinancing parameters
  • The vehicle can't have negative equity

If you're refinancing and want to keep your cosigner, they still have to qualify for the loan as well and must be on board with the process.

Refinancing to Remove a Cosigner

Cosigners don't have any right to your car, they only agree to help make payments if you become unable to. They also can help you get approved by lending you their good credit score and giving the lender peace of mind.

If you're refinancing and no longer need or want a cosigner on your auto loan, you can simply remove them in the process, as long as you qualify for the loan on your own. You don't even need your cosigner's permission. It is courteous to let them know they've been removed from your loan, though.

Benefits of Refinancing With a Poor Credit

Can I Refinance if I Have a Cosigner?When you first took out your auto loan, perhaps you needed a cosigner to qualify due to poor credit. This is more common than you might think. Sometimes though, even the help of a cosigner isn't enough to keep you from slipping if an auto loan is too much for your budget to handle. This is when refinancing can really benefit you.

Refinancing is typically done to save money on your monthly payment. This is down by either extending your loan term, qualifying for a lower interest rate, or both.

If you simply stretch out your car loan term, your monthly payment goes down, but you end up paying more in interest charges since you have the balance for longer. This can be especially tough if you're already dealing with the higher interest rates that are common for borrowers with credit challenges. If you're going to stretch your loan term, the only way to save money overall is to also qualify for a lower interest rate.

However, if you qualify for a lower interest rate, you have the option to keep your loan to the same schedule, while still saving money. When you're charged less in interest you pay less overall on your auto loan.

Ready to Refinance Your Car?

If you think refinancing is the solution you've been looking for, we want to help. You can sign up to be matched to one of our refinancing partners that want to help. But, if you think refinancing won't cut it, or you don't qualify, trading in your vehicle might be the solution you've been seeking.

When you trade in your current vehicle you can use its equity to make a down payment on your next one, as long as there's also enough to repay your original loan. In some cases, even if you have negative equity, lenders may allow you to roll it into your next loan. Be careful doing this though, as it could start your next loan in a larger negative equity position.

Not Sure Where to Start?

When bad credit has you unsure of your situation, you're not alone. It can be tough to find a lender that works with bad credit borrowers, and not all lenders do. Instead of searching all over town on your own, let us guide you on your way. Here at Auto Credit Express, we have gathered a nationwide network of special finance dealerships that work with people who have bad credit, no credit, and even bankruptcy. Let us take the hassle out of your search by simply filling out our fast, free, auto loan request form today.