While it’s not impossible to refinance your car loan after a late payment, it’s very difficult if you’re currently behind. Lenders typically require you to be up to date on your vehicle payment – among other requirements – in order to approve you to refinance an auto loan.

How to Qualify for Car Refinancing

The main goal of refinancing is to lower your monthly payment, either by extending the loan term or qualifying for a better interest rate. If you took out a bad credit car loan, you may have considered refinancing at some point, but what does it take to get approved?

In addition to being up to date on your vehicle payment, there are four other conditions lenders generally look at when determining if you can refinance or not:

  1. Can I Refinance My Car Loan if I’m Behind on Payments?Your credit score must be good or have improved – One of the first things lenders look at is your credit score. Your credit score needs to be considered good to qualify, or it needs to have improved since taking out the initial loan if you took out a bad credit auto loan.
  2. You don’t have negative equity – Lenders usually turn down applicants if they have negative equity. Negative equity happens when your car is worth less than what you owe on your loan. It’s common to be upside down, but it’s important that you not have negative equity before you apply for refinancing.
  3. Vehicle must meet the lender’s qualifications – Each lender has different requirements that need to be met when it comes to your car. Typically, lenders won't finance vehicles that are older than 10 years and/or have over 100,000 miles on the odometer. However, the specifics are going to vary from lender to lender, so be sure to ask about their car requirements.
  4. Loan amount must be within the lender’s limitations – Lenders also have a specific limit regarding how much they’re willing to refinance. The loan balance must fall within the lender’s acceptable range, and the minimum and maximum cap amounts vary by lender.

Where Should I Refinance My Car?

Now that you know what the requirements are, where should you go to refinance? You have a few refinancing options to choose from.

If you have a good relationship with your current lender, you could opt to refinance through them. However, you may miss out on a great deal if you choose to not shop around and compare loan rates. It's in your best interest to apply with a few different lenders so you can see what they can offer.

Another option is a bank or credit union. Both typically offer refinancing, but credit unions are usually easier to get approved at since they’re not-for-profit organizations that are known for being more lenient.

Finally, if the thought of driving around town visiting various lenders sounds stressful, you can apply for refinancing with an online lender. Our trusted partner allows you to view and compare offers if you simply get started by filling out our free refinance request form.

Simply Looking for an Auto Loan?

If refinancing isn’t in the cards right now and you need a bad credit auto loan, Auto Credit Express can help you out. We’ve been matching consumers to local special finance dealerships for over 20 years to help them get new and used car loans.

Let us connect you to a local dealer that can get people in unique credit situations financed. Fill out our fast and free auto loan request form to get the process started right now!