Bad credit can make a big difference in the amount of money you end up spending on an auto loan. If you're looking for ways to save money on your current loan, without refinancing, we have some tips for you.

Save Money Without Refinancing

When you want to save money on your car loan, you have plenty of options. If it's been over a year since you've taken out your loan, and your credit score is good or at least improved, refinancing can be one of the better ways to save money on your car loan.

However, if refinancing isn't an option for you, or you simply don't want to go through the hassle, you typically have a few other options.

Start with a large down payment. The more money you can put down on a loan, the less you have to borrow. This saves you time and money, and you pay fewer interest charges. This is especially important for bad credit borrowers since you typically qualify for a higher interest rate.

How to Save Money Without Refinancing Your CarOpt for the shortest loan possible. When you need to save money on an auto loan, taking one out for the shortest time you can comfortably afford saves you money in interest charges. Car loans are typically simple interest loans, meaning interest charges accrue daily based on your principal balance. Shorter loan terms mean higher monthly payments, leaving less for interest to be charged on.

Pay off your loan faster. Even with a short loan term, or a small initial loan, you can only save money by paying off your loan ahead of schedule. Most auto loans don't include prepayment penalties, so you can pay your loan as quickly as you please. There are several ways to accomplish this in order to save on interest charges: pay extra whenever you can; split your payment by paying half at the beginning of the month, and the other half on or by your due date. You could even round up your payments to a set higher payment if you can afford it. Every little bit helps.

Try having a cosigner. There's no guarantee that having a cosigner qualifies you for a lower interest rate, which can save you money, but if you're struggling to get an auto loan, adding a cosigner with better credit can help. If their credit is high enough, it may persuade the lender to give you better loan terms than you could qualify for on your own.

Refinancing to Save Money

When you refinance, you're replacing one auto loan with another on the same vehicle. If you're running out of options to save money on your loan without refinancing, you may need to consider it if you want to stay in your current vehicle.

The most common reason for refinancing is to save money on your monthly payment. This can be done by either lowering your interest rate or by lengthening your loan term.

Only a lower interest rate or a combination of a lower rate and longer loan term can save you money overall. If you stretch your loan term without a better interest rate, your monthly payment can decrease, but you end up paying more in interest over the remainder of your loan.

To qualify for refinancing you must typically have:

  • Good credit, or a better credit score than when you started your loan
  • The car must be within the lender's range for age and mileage
  • The loan amount must be acceptable to the refinancing lender
  • There can't be negative equity in the car
  • Your payments must be current

Trade-In for a More Affordable Car

If you're not so keen on keeping your car, or it's just not an option without refinancing, you can consider trading in your vehicle for a more affordable model. As a bad credit borrower, it's important to find an affordable, reliable car that holds its value. And, if you're in an equity position, anything left over after paying off your loan can be put toward a down payment on your next car.

Let Us Be Your Guide

If you're looking to save money on your next car loan either on a new vehicle or through refinancing, we want to help. At Auto Credit Express we work with a nationwide network of special finance dealerships that are signed up with subprime lenders.

These lenders work with people in many sorts of credit situations. Don't wait to find your next car loan, simply fill out our fast, free, no-obligation auto loan request form to get started.