It is not easy to get a loan when you have bad credit.
Many of the banks and finance companies have either stopped making these loans or gone completely out of business. So while many people on the news see this as a good thing and banks are getting what they deserve, there is a large amount of people who now cannot get a loan. Outdated information. “People on the news” seeing subprime lending take a hit and “getting what they deserve” is subjective and no longer accurate. Also, there are banks that are starting to get back into the subprime lending market again.
So now you ask yourself: “How can I refinance my car with bad credit?” Unfortunately many of the auto finance companies were also in the subprime mortgage crisis and now the boards of these companies see all loans like subprime mortgages. Auto loans are a completely different animal and now there are companies that understand that.
Bad credit is not an automatic decline in loan applications, however you will get a much higher rate than prime customers, and sometimes finance companies will also add fees to the loan. This is not necessarily meant that a company is taking advantage of you, but because of the subprime mess companies need to mitigate their risk in making these loans. So higher interest rates and possible fees, and thus higher payments, is just something people with bad credit have to deal with. Try out a company like RoadLoans.
However there is light at the end of the tunnel. A good payment history on a large trade line on your credit is a great way to pull yourself out of the bad credit cycle. Also you get to use one of your important assets to build your credit. As well as saving you some money every month, refinancing can also help your credit by adding to your payment history. You may have purchased your vehicle and did not get favorable terms upfront due to your credit issues, however now that you have paid well on your loan for the past few months, banks now look at you differently.
So back to the original question: How can I refinance my car with bad credit? Banks have very sophisticated ways to lend you money for your refinance. Bad credit is only a temporary situation and there are still ways to save money with your credit situation.
There’s some misinformation about applying for refinancing. There are multiple articles about how applying for loans lowers your credit score. This is actually a myth. There is a small lowering of your score for 30 days after you apply for loans, however this is only temporary. All of this is easily offset by refinancing your loan. The only piece of this issue that you may want to avoid is using what is known as a loan application aggregator. These companies send your information to multiple companies that all run your credit separately, sometimes weeks or months later. Read your terms and conditions carefully if you choose to use one of these companies.
There really is not any downside to trying to refinance your loan, you may just save yourself some money.