You’ve likely heard of people refinancing their homes to get a better mortgage rate. But did you know it’s possible to refinance a vehicle as well? This practice can be a great way to save money in the long run. Even if your credit is less than stellar, you may still be able to refinance your vehicle and experience all the benefits that go with it.
Refinancing a Car
What does it mean to refinance a car in the first place? Essentially, refinancing is the process of replacing your existing car loan with a new one. You’ll use your new loan to pay off your original loan, then you’ll start paying the new lender.
Refinancing might sound intimidating, but it’s actually easier than it seems. The application process is quick and easy in many cases. Plus, it usually doesn’t take much time for lenders to finalize your approval.
You may have heard that you can’t refinance your car if you have bad credit. Luckily, that’s not true! With a bit of research and patience, you can find a refinancing agreement that works for you, regardless of what your current credit score is.
Benefits of Refinancing Your Auto Loan
Perhaps the most obvious benefit of refinancing is the potential to save money. You may be able to secure a lower interest rate, which can lower your monthly payments. Otherwise, you might qualify for a longer loan period, which allows you to pay less each month.
Refinancing your car can also help you improve your credit in the long run. If you have lower monthly payments, you have a better chance of making your payments on time and in full. Over time, this practice can help you build your credit and increase your score.
When Should You Refinance Your Car Loan?
Refinancing your car might sound like a good idea, but is it right for you?
If you’ve been working to build up your credit and have made some substantial progress, it might be a good time to consider refinancing. An improvement in your credit can make it easier to get approved for a better interest rate.
On the other hand, if you’re having trouble affording your payments from month to month, refinancing may be a good option as well. You may be able to find a loan with a longer repayment term, which can lead to smaller monthly payments. Alternatively, you may be able to find a new loan with a lower interest rate, which will lower what you pay each month, and the total interest paid for the loan.
On that same note, if interest rates have lowered in general, then refinancing could benefit you. Interest rates can fluctuate based on the current conditions of the market, so there’s a chance that market rates may have changed since you initially took out your loan. If you’re refinancing at the right time, you could significantly change your payments for the better.
Finally, refinancing can be beneficial if your car has a high value. If your car’s value is high compared to the amount that you owe on your loan(equity), you could qualify for lower interest rates than what you’re currently paying. You can find multiple resources online that can tell you the value of your car such as Kelly Blue Book or Manheim Market Report
How to Refinance a Car Loan with Bad Credit
As we mentioned, the refinancing process is fairly simple. But before you get started, there are a few steps to take to help you get the best deal.
First, take a look at your current standings. Check your credit score and check for any inaccurate information before you apply to refinance. If you do find anything wrong, get in touch with the credit bureaus to get the errors taken care of. You could see an increase in your credit score or perhaps have a better chance to qualify for a new loan.
After you’ve checked your credit score, get in touch with your lender. If you’ve had a good relationship with your lender and have a history of on-time payments with them, then they may be willing to refinance your loan. This process would take less time than having to find a new lender to work with. However, some lenders don’t refinance their own loans, so be sure to ask.
If you want to (or have to) work with a new lender, it’s time to start shopping. Just make sure you shop around relatively quickly. Each lender will do a hard pull on your credit report, but if you have multiple inquiries within a 14-day period, the credit bureaus will view them all as a single inquiry, which reduces the impact that a hard credit pull can have on your credit score.
When you’re looking to refinance, ask your potential lenders about the loan terms and annual percentage rates they can offer you. It’s also important to ask about other fees you could incur during the course of your loan.
Working with FA Financing
Refinancing your car doesn’t have to be complicated, and you don’t have to do it alone. FA Financing is here to help you qualify for the best auto loan possible, regardless of your credit score or history.
FA Financing is happy to work with clients with multiple auto loans, multiple repossessions, recent bankruptcies, or trouble proving income. We’ll take a look at your entire situation and highlight the positive aspects of your loan application, helping your future lender see you as a person and not just a number.
Getting started with FA Financing is easy. Just fill out our pre-approval application, submit a few documents, and get an instant decision. We have a huge network of lenders, providing plenty of options for you to choose from. Our team will even help you to narrow down your choices and decide on the loan that’s best for you. If you’re ready to refinance your car and get on the road with a little more money in your pocket, contact FA Financing today to get started!
