If you had bad credit when you took out your car loan, you were probably faced with a high interest rate, which increased your monthly payment. Refinancing is designed to make your auto loan more affordable, and it can help you get a lower monthly payment and save money in the long run.
Making Your Auto Loan More Affordable
Refinancing makes your car loan more affordable by lowering your monthly payment. You can do this by lowering your interest rate or extending the loan term.
If your credit has improved since taking out the initial auto loan, you may be able to qualify for a lower interest rate. Not only does your monthly payment drop, but your total interest decreases as well.
For example, if you took out a $12,000 car loan for 60 months and had an interest rate of 16 percent, your monthly payment would be $292 and your total interest expense would be $5,509. If you refinance and qualify for an interest rate of nine percent, your monthly payment ends up being $249 and the total interest expense is $2,946.
If your credit hasn’t improved and you need to make the monthly payment more affordable, you may be able to refinance and extend the loan term. For example, if your original loan was $16,000 for 48 months with a 16 percent interest rate, your monthly payment would be $453 and the total interest expense would be $5,765. If you extend the loan term and refinance for an additional 12 months, your monthly payment ends up being $389 and the total interest expense increases to $7,345.
Qualifying for Car Loan Refinancing
Not just anyone can qualify for refinancing. To do this, you can go to your current lender and see if they can refinance you. If they can, great! If not, you need to find a different lender who can work with you. Better yet, you should rate shop by applying with multiple different lenders and search for the best deal.
You must meet the lender’s basic refinance requirements, including being current with all of your monthly payments. Your vehicle must also qualify by meeting certain age and mileage requirements. Lenders aren’t going to refinance a car that falls outside of their age- and mileage-specific requirements. Additionally, they aren’t going to refinance a vehicle that’s upside down, so make sure it’s worth at least as much as the loan balance.
Need Help Finding a Dealership to Work With?
Refinancing isn’t for everyone, so make sure you look over your current financial and credit situation beforehand.
While we can’t assist with refinancing, we can help you find a dealer who can guide you through your credit challenges to help you get an auto loan. Auto Credit Express works with a nationwide network of special finance dealerships that are experts at helping people who struggle with credit issues get financed.
Our car loan request form is simple and secure, and it only takes a few moments to complete. Get started today and we'll get to work matching you with a local dealer!