There are 2 conditions for which you need to refinance your car loan – either to reduce the rate of interest or to decrease the monthly payment. In both the cases, refinancing when you have a bad credit seems tough, but there are a few lenders who provide refinancing loans inspite of the bad credit.
#2 Ideal score for car loan refinancing
Here are the details on how to get refinance car bad credit
Do you want a lower rate of interest? In that case it is better if your score is better than earlier. To be frank, there is not a proper score. It entirely depends on the lender. If you have paid your installments for last 8-12 months properly, the chance of getting a refinancing becomes higher.
Try to have a cosigner
In case, your money lender doesn’t agree to lend you loan any more, you can find a cosigner with bad credit. His or her sign will make the lender re-think his decision and he will agree to provide you with loan.
There 4 steps that you should follow when searching for lenders to refinance your vehicle loan.
- First of all, verify your credit scores as well as credit reports very well: Make sure there are no errors in the reports because one single mistake can stop you from getting the refinance. Moreover, you have to give a completed and accurate record to the loan providers. The chance gets better if your record is better than the previous one.
- Sit with your current lender and listen to his terms and come up with a plan that will suit your need. Have you made payment properly consecutively? Has the rate of interest become lower? Is your score improved? In all these cases, he might agree to give you loan again because no one wants to lose a customer. And this is a win-win situation for both of you. But, if he disagrees, then you have to look for a new lender, no other way.
- Explore at least 4-5 lenders to get the best deal. Are you thinking why you should do this when your current lender has already agreed to give you loan again? Well, there is no harm in exploring different options. Once you will start checking different lenders, you will see that every one of them has different conditions for refinance. Some have lower interest rate while some have higher. The lenders, who have lower rate of interest, might have other add-ons like payment penalties. So, compare the total no payments, amount of monthly installments and other fees if applicable. After that finalize your lender.
- Try to enhance your credit score and take proper step for that. For example, pay your installments per month without fail, don’t do anything that will increase the credit inquiry and try to decrease the amount of debt than your credit limit.
All these will increase your credit score and once your credit score will enhance, you will have a better opportunity to refinance your car loan.