Is It Possible to Refinance an Auto Loan on Bad Credit?

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Is bad credit auto refinancing possible? The answer is yes. If you are an Atlantan who intend to refinance an auto loan on bad credit, know that the process will not be as easy as refinancing an auto loan on good or excellent credit. There is bound to be a lender that can help you, but you need to take the necessary steps and spend time seeking out such lender.

 

What to Do First

Typically, an individual who qualifies for auto loan refinancing is one with at least a fair credit score. It is easy to assume that bad credit immediately makes you ineligible, but this is not true. There are lenders that are willing to refinance even bad credit auto loans, but before you find them, you must be sure about your own credit.

Each person has more than one credit score, and no two scoring models are the same. A low score for one lender or model can be average for another. Hence, you should pull your credit report prior to applying for refinancing to see what your actual credit situation is. Your score reflects your history, so make sure the record with the credit bureau is accurate. If you have spotted inaccuracies, dispute them. Apply for refinancing only after you have settled inaccuracies.

 

The Search for the Lender

How should you begin your search for a lender? Start with the local banks or credit unions you have a relationship with. Inquire if they refinance auto loans with bad credit. Lending institutions like the aforementioned will be more willing to work with people they do business with. Credit unions in particular are known to go out of their way to serve their members.

Expand your options by doing further research. Find out which banks, finance companies or other lending firms can offer you a bad credit refinance loan. You may have better chances of getting approved by an online independent auto loan company because companies as such have less stringent credit requirements. After you have gotten a number of lending options, get quotes and compare rates.

 

When the Refinance Loan has Been Secured

If you have secured auto loan refinancing despite bad credit, consider yourself lucky. Take the refinance loan as an opportunity to rebuild your credit. Make payments on time. Adjust your spending if you have to. Your bad credit will get you a higher rate, but at least this rate is lower than what your original loan had. There is no point refinancing a loan if you will get a much higher rate anyway. Do what you have to to make the monthly payments so you can settle the loan in full and officially own the car.

 

When Worse Comes to Worst

Should you fail to find a lender that grants you bad credit car refinancing, don’t fret. If the monthly payments of the original loan is too much for you (and are the reason you are seeking refinancing in the first place), contact your original lender and explain your financial situation. Lenders prefer borrowers to approach them beforehand rather than deal with a delinquency. It is possible your lender will extend the term to help make your payments more affordable.

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