Whether or not it's easy to refinance a car loan depends on your situation and the lenders you're working with. Still, the process is usually no harder than applying for a refinancing loan. Here's what we know.
Refinancing Made Easy
Refinancing means replacing your current car loan contract with a new one that has different rates or terms. The purpose of refinancing is to save money on your monthly auto loan payment. This is typically done with a new lender, though asking your current lender if they can refinance your loan is one step you can take to make the process even easier.
If you are able to refinance with your current lender, they already have all your information, know your payment history, and know the history of the vehicle you're refinancing. These things can make the process go faster.
However, if your current lender isn't able to help you refinance, the process is as simple as applying to other lenders. You can look at banks, credit unions, and online lenders, but you should rate shop to find out which deal is best for you.
Roadblocks to Refinancing
The process of refinancing a car loan is typically easy, but it can become more difficult in a number of situations. Here are some examples that can make refinancing tough to do.
- Haven't had the loan for very long – In most cases you must have had your loan for one to two years in order to qualify for refinancing. All lenders have their own refinancing requirements that you have to adhere to.
- You have negative equity – Negative equity is a no-no when it comes to refinancing. You must owe at least your loan balance or less in order for there to be equity, or value, in your car.
- You owe too much or too little – Your loan balance must fall within lender requirements. If you owe too much or are too close to paying off your loan you may find it difficult to refinance.
- Your vehicle doesn't meet lender qualifications – Vehicles must fall within a certain range of age and mileage when you refinance. Ranges vary by lender.
- Your credit doesn't meet lender requirements – Refinancing is typically reserved for people with good credit. If you have poor credit, or your credit has dropped since taking out your loan you may find it tough to get refinancing approval. However, this doesn't mean bad credit borrowers are out of the running for refinancing.
Refinancing With Bad Credit
If you need to refinance but originally took out a bad credit car loan, all hope isn't lost. Even bad credit borrowers can qualify for refinancing in some cases, as long as your credit score has improved since you first took out the loan.
If you're not sure where to start, we want to help. Auto Credit Express works with a number of refinancing partners that can help you refinance your car loan. Simply fill out our fast, free, auto loan refinancing request form today.