Many people struggle to pay their bills on time, especially their car payments or any other loans associated with their vehicles. This problem is even further compounded if you have bad credit and thus have limited options for getting back on track. Fortunately, if you know how to go about it, it is possible to refinance your car loan…even with bad credit.
The Benefits of Refinancing
First of all, before you think about whether you can refinance your car loan, you have to think about whether you should.
In general, though, if you have fallen behind on your loan payments and can’t see how you can keep up, refinancing is a good option. As long as you go about it the right way, it can offer many benefits. Potential advantages include:
- Lowering your monthly payment, making it easier to pay in full and on time
- Lowering interest rates
- Preventing default on the loan
If these things appeal to you, then you will certainly want to look into refinancing as an option.
Work to Improve Your Credit
First things first, if you want to refinance your car loan with bad credit, check to see how bad your credit actually is.
You might find that it’s not as bad as you think. Even if it’s awful, however, you can still take steps to make it somewhat better. And, each little, positive change that you make can increase your chances of getting the refinancing you need.
Start by carefully going over your credit report and making sure everything is accurate. If you find something that is not and that is working against you, file a dispute to get it removed from your credit report. You’d be surprised at how much wrong information can be on your credit report, especially if you have the same name as or a similar name to someone else in your family.
Aside from that, take small steps toward improving your credit, like aiming to pay down credit card debt or to pay a bill on time for a few months. Small changes like these might not drastically affect your credit score, but they may affect it enough so that you can get refinanced.
Work Directly with Your Lender
In addition to working on your credit, try being open and honest with your lender to increase your chances of refinancing your auto loan.
People often think of their lenders as their enemies and avoid their phone calls, but this is actually one of the worst things that you can do. In most cases, especially if you have a good prior payment history, your lender wants to work with you. They would rather have your payments than have to repossess the vehicle.
Thus, talk to your lender about your situation. Be willing to provide a good reason why you need the refinance, such as having lost a job, making less at work, or having medical bills to pay. Often, if you can provide a verifiable reason that you have fallen behind, your lender will work with you.
Ultimately, you have nothing to lose by asking your lender about refinancing options and potentially everything to gain.
If you can follow this helpful advice, there’s a good chance you can get your car loan refinanced and also enjoy all of the many advantages that go along with refinancing. The only way to know for sure, however, is to try, so go for it!