If you’ve had a bankruptcy discharged, and then successfully took out a bad credit auto loan after, when can you refinance it? You can refinance a post-bankruptcy car loan, but you generally have to wait for at least a year to pass in order to qualify – as is the case for any other auto loan. There are also specific car refinancing requirements you need to meet that vary by lender. However, we can tell you what most lenders look for so you know what to expect.
The Right Time to Refinance a Car Loan
The main reason to refinance is to save money on your auto loan. If you just want to pay your car loan off faster, all you have to do is increase the payment each month – there’s no need to refinance.
However, not everyone can do this if their monthly payment is currently pushing the limits of their budget, and that’s where refinancing comes in handy.
There are two different times when refinancing should be considered:
- You want a lower interest rate – If you took out a bad credit auto loan, your interest rate is probably higher than average. If your credit score has improved since taking out the original loan, you can try to qualify for a better interest rate by refinancing.
- Your financial situation changed – If you lost a job, or something else like medical expenses has affected your financial situation, you can refinance and extend the loan term. Increasing the length of the loan allows you to lower your monthly payment, but it increases the total cost of financing in the long run. Still, this can be a necessary temporary fix until your situation improves.
Auto Loan Refinancing Requirements
Now that you know the right times to refinance, how do you qualify? Most lenders like to see that at least a year has passed since taking out the original loan, and that your credit score has improved. In addition, you typically must meet these refinancing requirements:
- Be current with your payments – Lenders need you to be current with your monthly payments. Most aren’t going to approve you for refinancing if you’re delinquent.
- Have equity in the vehicle – You should have equity in your car. Equity is when you vehicle’s actual cash value is more than the loan balance.
- Make sure your car meets the lender’s age and mileage requirements – Each lender has their own requirements your vehicle must meet in order to qualify for refinancing, including age and mileage limits.
Looking to Refinance?
You generally need to have improved your credit score in order to refinance an auto loan, as well as meet the lender's other requirements. If you're looking to refinance, our trusted partner can help you find the refinancing deal you're looking for.
If, on the other hand, you simply need a bad credit car loan, Auto Credit Express can help with that. Our service matches borrowers to local dealerships that know how to work with bad credit. Get the process started today by filling out our free and easy car loan request form.
