Bad Credit Auto Refinance

Bad Credit Auto Refinance - If you had bad credit and a low FICO score when you purchased your car, you may be paying an interest rate as high as 25% on your current auto loan.

But if your credit has improved since then, you may qualify for a bad credit car refinance, which can significantly lower your interest rate and monthly payment. Below are some of the factors that can have a positive impact on your credit score:

• Paying down credit cards. Reducing your credit card balances to at least half of their limits will improve your credit score dramatically. To qualify for the lowest rates, aim for using 30% or less of the available credit.



• Timely payment history. Making payments on time and in full for at least six months will help bolster your credit score.



• Employment. If your work status has changed from self-employed to an employee, this will improve your credit score. Ideally, lenders prefer that customers have been employed at the same job for at least three years.



• No new accounts. Opening new credit accounts sends the message that you're constantly looking for credit, resulting in a decreased FICO score. Each new line of credit you establish opens the door for potential debt, increasing your potential risk in the eye of the lender.



• Know your score. Obtain a copy of your credit report from each reporting bureau (Equifax, TransUnion, and Experian) at AnnualCreditReport.com, and then scour the reports for errors. While you'll have to pay extra to obtain your actual credit score, it pays to know this information before applying for a bad credit car refinance.

If your credit score dips below 680, you are considered a sub prime borrower. The good news, however, is that this rating makes you a possible candidate for a bad credit car refinance. Bad credit specialists offer sub prime auto refinances at rates that are adjusted to reflect the added risk. While you won't qualify for a 3% APR, you may qualify for an APR of 17%, which would yield significant savings if your current loan is in the 20-25% range. (For a better look at how a lower interest rate can significantly reduce your monthly payment, use an online refinance calculator.)

When you're ready to contact lenders, be sure to ask about interest rates as well as any additional fees or penalties. When you have all the information about the interest and fees, input the information into a refinance calculator and evaluate whether a bad credit car refinance can benefit you.

While it can be difficult to obtain a bad credit auto refinance, the results will likely be well worth your effort. Before signing on the dotted line, review the information closely to be sure that a bad credit car refinance is truly in your best interest.


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