Auto Refinance Loans with Bad Credit
While many consumers are familiar with the idea of mortgage refinancing, they shy away from the thought of refinancing their car thinking that it will be a complex process with very little financial benefit. In fact, car refinancing can make good business sense and the process is much simpler than most people imagine it to be. Let’s take a look at some of the benefits of auto refinancing.
Auto Refinance Benefits
Getting an auto refinance really provides a lot of benefit – especially if you’re wanting to lower your car payments, free up some cash, or just benefit from paying a lower interest rate on your vehicle.
Complete Auto Loans specializes in providing car or truck owners like yourself with bad credit auto financing, and is well known as one of the top auto refinancing companies across the U.S.
So, what’s the purpose of getting auto refinancing?
The purpose is to be able to improve your credit score and lower your monthly payments – all without adding any further damage to your credit history.
Here are 4 easy steps that we’ll be walking you through on how to refinance a car loan. We’ll help you:
- Understand the benefits you should be looking for and how to determine the best time to get a bad credit refinance auto loan
- Get your latest credit score information, compare the best interest rates, and estimate your monthly payments
- Find the best company that specializes in refinancing car loans with bad credit, and walk you through the online application process (and meet all minimum requirements)
- Analyze the loan offers you’ve received and help determine which loan is the best fit for your situation. We’ll also help you gather any information you may need to make that choice
You’ll be able to apply online to refinance your auto loan with…
- no worries
- no application fees
- no obligations
As one of the best car refinancing companies, Complete Auto Loans is dedicated to helping you walk through the refinance process, helping locate the best rates for your situation – even with bad credit history. You’ll even be able to skip a payment in the process.
We’ve also put together resources to help you with your next vehicle refinance decision. You can check out our FAQ for more information, or, if you’re interested in buying a new car, you can see our “New Car Buying Guide.”
You’ll find that we answer common questions you may have about refinancing your car loan, as well as address other topics related to auto financing with bad credit.
Under the right conditions, refinancing your car or truck can make a lot of financial sense when it frees up money in your budget or helps you save money on future car payments.
Refinancing your vehicle carries many similar advantages to refinancing a home mortgage. It allows you to get a lower interest rate, monthly payments, and change the loan term. There is one big difference, though. Refinancing your car or truck is a lot simpler – and faster – than refinancing a home. And, you don’t have to deal with any closing costs (or other fees) in the process.
Complete Auto Loans’ auto refinancing lenders help make this process as simple as possible. You’ll also notice that you can reclaim the equity in your car by qualifying for a refinance auto loan with poor credit.
This cash back refinancing, or “cash out,” can really be a help to you. Let’s take a look at some of the benefits:
If you have personal loans or credit cards with extremely high interest rates, consolidating high-interest debt by applying to refinance those loans could allow you to free up money and lower your payments.
Auto refinancing can help you free up money for home or auto repair. At any time, your home or vehicle could need some unexpected repairs. Refinancing your car or truck can allow you to free up the cash flow you need for those things, rather than getting yet another loan (that can take a while for approval). Major or minor repairs don’t have to be upsetting from not having enough cash. Auto refinancing can help you stay out of the position of needing to sell your vehicle in order to fix another needed repair.
Lower Car Payment
By getting a more competitive interest rate and extending your auto loan, you can increase your monthly cash flow by lowering your car payments.
Here’s an example
If you an 12 more months to a loan that was originally 24-36 months, you can expect your auto refinance with bad credit to reduce the possibility of late (or missed) payments while lowering your monthly and yearly costs. However, this does push out the loan payoff date and increase your total expenses from interest.
Lower interest rate
Here’s a question – did you have subprime credit when you first bought your car? If so, you may be able to start over and get a better interest rate with an improved FICO score. Refinancing your loan at a lower interest rate is totally possible if you’ve made your payments on time and have had the loan for a year or longer. Getting auto loans for poor credit are good to get things started, but they should be replaced with ones that have better interest rates through refinancing as your credit score improves.
The nice thing is that you can take action now to improve your interest rate. Just a percent can save hundreds to thousands of dollars over the life of your loan.
Get Cash Back and Skip a Payment
If you financed a car at a higher interest rate than is currently being offered, refinancing may be the best decision for you. If you have good credit history, you may be able to save yourself $100 dollars a month or more which will give you the freedom to decide whether you want to continue to lengthen your payments out or pay your car off early. Here’s a few questions you should ask yourself to help point you in the right direction:
How Does My Current Interest Rate Stack Up Against New Rates? Pull up an online loan calculator and input the remaining balance on your auto loan. Enter the number of months remaining on your loan at your current interest rate. Next, enter these figures at the new interest rate. If the difference is significant, the time spent working with an auto refinancing loan specialist will be well worth it.
- How Long Is the Term of Your Loan? When the term of your loan extends past four years, you are paying a lot of additional interest. By switching to an early pay-off, you can significantly reduce the amount of interest that you pay out.
- How Does Your Credit Score Look? If your credit score has significantly improved since you purchased your car, you should seriously consider refinancing your car. Each improvement of your credit score means that you can shave a major amount of interest off your loan payment. You will see a significant drop in interest rates when your credit score rises above 720.
How to Understand Car Refinancing Penalties
Sometimes, refinancing a car loan doesn’t make sense. Check your loan paperwork to see if there is a significant penalty for an early pay-off. In many cases this penalty is so high that you’ll wind up losing money in the process.
Additionally, if a refinancing deal significantly extends the life of your car loan, it is possible that you will wind up paying more in interest over time. It’s important that you understand that refinancing helps you save money in the short-term but increasing your loan payments (as you’re able to) will help you reduce the amount of money you shell out to lenders by paying off the loan early.
Refinancing Rates May Skyrocket in the Near Future
Auto Refinancing with bad credit could come to a screeching halt after three years of national lenders passing out loans to people with sketchy credit histories. The original intent was for the government to help car manufacturers increase production by allowing more people with low credit scores to qualify for a car loan or refinance.Part of the delinquency issue for people who need auto refinancing with bad credit is due to the fourth quarter losses during holidays and end of the year taxes when people usually stretch their budgets. This was recently stated by the S&P:
“Many lenders have told us that their performance in recent years exceeded their expectations,” Martin wrote in a report last month. “We are now hearing that they expect losses to trend upward to more normal levels this year and next.”
While the best may be behind us for rock bottom rates for people with bad credit history there’s still a good chance that after tax season we may see a normality of car purchases and loan payoffs which would steady the bleed off of car repossessions and loan delinquencies.
According to Experian Automotive repossessions and loan defaults have increased 1.23% since September which constitutes the largest climb since 2006 (when Experian started tracking their data).
What Does a Car Refinance Look Like?
You may be considering refinancing your car right now in the hopes of saving money. Perhaps you want to get a better deal, or lower your monthly payments. That’s fantastic!Refinancing your car can literally save you thousands of dollars by lowering interest rates. Another benefit of a refinance is avoiding possible repossession of your vehicle by lowering your monthly payments to something more manageable.
If you’re looking for a quality lender, we’ve done all of the research for you with our expert team. Just fill out the form on the right to start the approval process ofor refinancing your current car loan.Here are a few tips for deciding whether or not you should refinance your vehicle.
Understand Current Auto Refinancing Rates
Unless you’re trying to avoid repossession you’ll generally not want to refinance your car at a higher interest rate with longer terms. Lengthening out the term of your loan may cost you thousands of more dollars in interest. Make sure and do the math with a quality auto loan calculator.
The current interest rates should be better than the ones that you agreed to when you first bought your car. This will certainly extend the amount of time you will be paying off your loan, and will also make you pay more in interest in the long run.
Will Refinancing Your Car Really Help You Save More Money?
Consider how much money you will save in the long run. You will likely lose more money in the long run than you could by simply paying off your current car loan.
Will a Refinance Make Sense with Your Car Depreciation Value?
Cars depreciate. According to Dave Ramsey, your brand new car will lose 25% of its value the moment you drive it off the car lot. In 4 years, your car will have lost 70% of its value. Will this loan last longer than your car? If you have only a few years left on paying off your car, it’s probably better to just pay off your current loan, than to try to get a new loan that might outlast your car.
Once again, these tips entirely depend upon your specific financial situation. If you are facing a possible repossession, bankruptcy, or have the opportunity to reduce your interest rate to pay off more principle every month then a refinance is a great option.
Reducing Monthly Installments – Tips for a Lower EMI
According to Transunion, the auto refinance industry has recovered sharply since record high delinquency rates in 2008. For consumers, this means that auto-loan interest rates are at a record low, and lending agencies are willing to lend more money than ever before. With more Americans seeking financing for their new and used car purchases, consumers should keep the following tips in mind to reduce monthly payments on car loans.
- Learn your Equated Monthly Installments – Dealerships and lenders should provide you with the Equated Monthly Installments, or EMI, for the life of your loan. This number is the total cost of your loan (principle + interest) divided by the total number of months in the loan. The EMI is the most important number for your loan, as it determines the overall affordability of the loan package. Only accept a loan if you think that the payments will be affordable throughout the entirety of the loan.
- Pay down the Principle Early – If you can afford it, make a monthly contribution directly to the principal of your loan. Extra payments will reduce the length of a loan, greatly reducing the total amount that is paid in interest over the life of the loan. Depending on the interest rate for your loan, extra principal payments can contribute more to your financial security than investments or savings.
- Extend the Term of an Auto Loan – Some lenders will allow you to extend the life of your current loan, usually in the event of sudden employment or financial hardship. Extending the term of a current auto loan will reduce monthly installments on that loan, but it will increase the total amount that you pay throughout the life of the loan.
Auto Loan Refinancing
With interest rates as low as they are likely to be for the foreseeable future, now is a great time to refinance existing auto loans. Refinancing takes advantage of new interest rates, paying off old loans and transferring loan balances to new loans with low interest. Most lenders that offer car loans will also offer some form of refinance.
Sometimes, borrowers can save money by consolidating their loans into a single umbrella loan. Normally the rates that you pay on auto loans are among the lowest interest rates that you will receive on any loan, but when combining secured and unsecured debt it is possible to end up with a loan that has a lower net interest rate than the rest of the loans combined. This occasionally saves money for borrowers.