Auto refinancing loans are a lot more common than you might think. Since nearly a quarter of all Americans qualify as having below average credit, getting your car refinanced with bad credit is indeed quite possible. Generally speaking most bad credit auto refinancing loans fall with in the range of credit scores of 570 to 650. Above that and you don’t even need a “bad credit” auto loan as you can qualify for a normal one. And as long as your credit score is above 550 you should be able to qualify for a loan without the need of a cosigner.
Since these types of loans depend on your credit score so much, it is a good idea to first discover where your score lies. You can do this in several places but the easiest is through one of the online credit score companies. There are many of these types of companies out there – just do a simple Google search. Check and make sure you have no errors as those can drastically affect your credit score in a negative way. If you do you have any disputes you can always report them but it can take up to 60 days for them to get cleared up.
You should also understand the point of an auto refinance loan before you go through with anything. Generally the idea is to lower your interest rates and/or monthly payments. Since you have bad credit though, the chances of getting lower interest rates is not very good unless you have improved your credit score a good deal since signing the first loan. But either way you are quite likely to get a lower monthly payment. You will just have to pay on your loan for more time.
Qualifying for a bad credit auto refinance loan can be a little different than just qualifying for a regular car loan. The bank has to look at all the different factors affecting your credit score and see if lengthening the terms of your loan is a good idea for them. Having a solid on time payment history can help a great deal. Also if you have gone through the steps of trying to improve your credit score since the last time they looked, you may have a better shot.
If you do get turned down, you should look at some of the factors affecting your credit score and try to improve them the next time. Remember that at least 30% of your FICO credit score is determined by the balances on your current open revolving credit lines. So having a bunch of maxed out credit cards doesn’t help anything. You should work to pay them off but not cancel them. Because the more available credit you have, the better. Also you could try finding a cosigner. Which in itself is a difficult path sometimes.
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