Bad Credit Auto Loan Refinance - Bad Credit Auto Financing Tips

Is it possible to get bad credit auto financing even if you have bad credit? Most people know that it is possible to refinance their homes but did you know it is also possible to bad credit auto loan financing on their auto? Indeed for many people who have high interest sub prime car loans, getting new bad credit auto financing may be a wise decision. How do you know when refinancing your bad credit auto loan might be a good idea? And once you have decided to refinance, how should you go about doing it so that you actually improve your loan situation to get good auto financing rates?

Just like with your home, when you refinance your auto loan the old loan is paid off in full and it is replaced by a new loan. If when you bought your car your credit score was below 620, the interest rate on your auto loan may be significantly above the interest rate you can qualify for today. By getting new bad credit auto financing your monthly payment may go down substantially. Also, over the life of the loan you may save several thousand dollars in interest payments.

You may be a candidate for new bad credit auto financing if

Your auto financing loan has become "seasoned"; that is, if you have had it for at least a year.

You have made your payments in a timely manner.

Your car's value is more than the amount you owe on it.

If all of the above statements are true, then it may be time to investigate refinancing your car.

First, make sure you are fully aware of the state of your current credit report and current credit rating. Both of these are easily available online. You are entitled to one free credit report each year. Your current credit score (FICO score) should also be available for a nominal fee.

Second, find out your car's value. Having your car appraised is not a requirement for getting a new bad credit auto financing loan but you should know its value. Most auto financing companies require that your loan be at least $7,500 so your car value must be at least that amount. At your local bookstore and online there are many resources for estimating your car's worth. Two of the most popular sources are the Kelley Blue Book and Edmunds Buyer Guides. Be sure and have a realistic eye when surveying your car's condition, you can be sure your lender will.

Third, research the available lenders. It may be that your current lender will be open to refinancing your car. However, you should shop around for the institution that will give you the lowest interest rate and refinance as small an amount as possible. When these two conditions are met you will then also get the lowest monthly payment available.

Fourth, as with any auto financing, have all offers put in writing. Take the time to read the fine print and compare the proposals.

Finding a lender to give your a new bad credit auto financing loan may take some time and effort. The savings to your pocketbook every month and over the life of the loan, however, can easily make the time and effort worthwhile.

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