How easy it is to refinance a car loan depends on your situation and the lenders you work with. Still, the process is usually no more difficult than applying for a refinance loan. Here’s what we know.
Refinancing involves replacing your current auto loan agreement with a new one with different rates or terms. The purpose of refinancing is to save money on your monthly car loan payment. This is usually done with a new lender, although asking your current lender if they can refinance your loan is a step you can take to make the process even easier.
If you are able to refinance with your current lender, they already have all of your information, know your payment history, and know the history of the vehicle you are refinancing. These items can speed up the process.
However, if your current lender is unable to help you refinance, the process is as simple as applying to other lenders. You can check out banks, credit unions, and online lenders, but you should evaluate the store to find out which deal is right for you.
Obstacles to refinancing
The process of refinancing a car loan is generally easy, but it can become more difficult in a number of situations. Here are some examples that can complicate refinancing.
- I haven’t had the loan for a very long time – In most cases, you must have had your loan for one to two years to qualify for refinancing. All lenders have their own refinancing requirements that you must comply with.
- You have negative equity – Negative equity is a no-no when it comes to refinancing. You must have at least your loan balance or less for there to be equity, or value, in your car.
- You owe too much or too little – Your loan balance must meet the lender’s requirements. If you owe too much or are about to pay off your loan, you may find it difficult to refinance.
- Your vehicle does not meet the lender’s criteria – Vehicles must be within a certain age and mileage range when you refinance. Ranges vary by lender.
- Your credit does not meet the lender’s requirements – Refinancing is generally reserved for people with good credit. If you have bad credit or your credit has dropped since you took out your loan, you may have trouble getting refinance approved. However, this does not mean that borrowers with bad credit are not eligible for refinancing.
Refinancing with bad credit
If you need to refinance but originally took out a car loan with bad credit, all hope is not lost. Even borrowers with bad credit may qualify for refinancing in some cases, as long as your credit score has improved since you first took out the loan.
If you don’t know where to start, we want to help. Auto Credit Express works with a number of refinancing partners who can help you refinance your car loan. Simply fill out our fast and free car loan refinance application form today.