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Car Loan Refinancing

We all consider refinancing our mortgage, consolidating credit card debt, and other methods of profiting from lower interest rates, but have you considered refinancing your car loan?

Refinancing your car loan is easier than refinancing your mortgage. Instead of the need for an appraisal, lenders use Kelly Blue Book to appraise the value of your car.

There are several options to choose from when deciding where to find a lender to refinance your car loan. Most companies that do mortgage refinancing also do car loan refinancing. Credit Unions do more refinancing of car loans than anyone else, so they are a good place to start. Compare companies using your favorite search engine or go to bankrate.com and use their search engine.

Often, you can find companies that have no fee at all, whereas some have a small application fee. You may also have to obtain a new car title. See your state motor vehicles department for the fees associated with that.

Right now new car loans have an average interest rate of less than 8% nationwide. If your current car loan has a smaller interest rate than that, of course you don’t want to refinance at this time. Watch for interest rates to fall below the interest rate you got for your current car loan and act then.

When you do refinance, remember that the interest rates for a used car loan applies and that rate is usually a little higher than the interest rate on a new car loan. Right now the average rate on a used car loan is about 8 ½ %.

How do I know refinancing my car loan is a good idea?

If your credit score has improved. If you had bad credit when you took out your car loan, but since then your credit score has improved, then you might want to consider refinancing. If your loan was at a high interest rate due to poor or nonexistent credit, but after making payments or doing other things to improve your credit score, refinancing your car loan at 8 ½% could save you a lot of money over the life of your loan.

When the amount you owe is still a very substantial amount of the original loan. Your car needs to be less than 5 years old and only consider refinancing your car loan if you still owe more than $7500. They use your car for collateral, so lenders won’t underwrite a car loan that is not worth the amount you still owe.

If you are short of cash. Refinancing your car loan into a longer term loan and a lower rate can lower your monthly payments by a significant amount, giving you the cash you need to keep up with other bills you may have.

As stated above, there are many reasons for refinancing your car loan. There are also many options as far as where you get your new loan. Our best advice to you is to shop around and get the best rate possible for your new car loan, because you may not want to do it again for the life of the loan. Many people take out 2nd and 3rd mortgages on a home. We do not consider refinancing your car loan several times a good option.

Seeking Car Loans With Bad Credit: Factors to Consider Before Applying

Buying a car is a major investment for young people, and a vital one for others. Whether an automobile is needed for work purposes or simply to get around in, it is hard to survive in this society without one. The trouble is secure a car loan with bad credit is not a simple thing.

Just how an applicant might have attained a low credit score is down to any number of reasons. The most common is simply falling behind on repayments, but losing a job or getting county court judgments can also be major contributors.

Getting loan approval with poor credit scores is never easy, but there are options available. And even when it comes to getting a car loan, applicants with very low credit ratings can get the green light to buy the car they want.

Why Seek The Loan?

Young drivers are finding it more difficult to buy a car because their credit ratings are low. The reason for low credit scores can vary, but the lack of a credit history is partly responsible. So, young people usually have to apply for car loans with bad credit scores holding them back.

Therefore, getting a loan with which to purchase a car is not a simple task. This comes as no surprise, given that approval with poor credit scores is never easy anyway. But by applying for a loan specifically designed to cater to the bad credit borrower, the chances of success are greater.

Of course, the reasons for having bad credit can also be down to financial woes, perhaps created by a sudden loss of employment. However, the need to buy a car for a new job, or to develop your own business, means a car loan is necessary.

The Trouble With Bad Credit

It might seem strange that even with a terrible credit rating applicants can get the funds they need to buy a new car. But it is no strange thing at all. Securing car loans with bad credit comes down to the simple fact that bad credit scores are not a major issue for lenders – there are bigger influencers on a loan application.

Bad credit ratings are only an indication lenders go by when assessing an application, telling them the degree of risk associated with a loan deal. But today, so many people have seen their credit status adversely affected through no fault of their own that the score alone no longer has much influence.

Instead, getting loan approval with poor credit scores is dependent on income and the debt-to-income ratio. The ratio permits no more than 40% of income to be spent on debt repayments. So, if the repayment on the car loan pushes the percentage above that rate, the application will be rejected – if not, then approval is almost certain.

Clearing the Bad Credit Hurdle

The temporary nature of credit scores means that approval of a car loan can always be justified. Other than proving a large enough income and establishing repayments are affordable, showing an improvement in credit scores can have a major impact on an application.

Remember, not everyone gets bad credit scores because of poor money management. In many cases, it is as a result of redundancy, or economic developments or just plain bad luck. So, there are mitigating circumstances that lenders take into account. That means loan approval with poor credit scores is always possible.

Clearing some minor debts does improve matters, while a consolidation loan to completely restructure debts is also helpful. However, the car loan is unlikely to come cheaply, with higher interest rates to pay. This means the loan is more expensive, but approval makes it worthwhile.

Get a Car Loan With Bad Credit History: Four Strategies

People in need of a new vehicle and looking for a loan can often get discouraged if they have a poor credit history. Though it is true that finding a car loan with bad credit is difficult, it is by no means impossible. There are many lenders out there who specialize in working with poor credit and who will be able to get you a car loan.

The key to success in this search is doing the necessary research prior to purchasing a vehicle. There are several factors that go into a lender’s evaluation of a loan application. Bad credit will not be the only factor considered while looking for a car loan. The following four strategies can help you find the loan you need.

Strategy 1: Take an Honest Look at Your Credit History

It is true that good credit will make getting a car loan or any loan really, much easier than poor credit. Understanding the reasons for your bad credit score will help you to not only get a loan, but improve your chances of finding loans in the future. You want to make your credit better however, it is not impossible to receive a car loan with bad credit.

History of purchases, payments and other financial elements will generally help determine the credit score of each individual. Chronic late payments, too many loans, and large amounts of credit card debt will all contribute to your ultimate credit score. Concentrate on making timely payments, consolidating debt through personal loans and seek help from a financial counselor in order to help improve your credit score over time.

Strategy 2: Employment and Income

Aside from your credit history, your current income and employment history will be the other major factor in determining your likelihood of qualifying for a car loan. With bad credit, you need other factors to help endear you to lenders. Sufficient income to ensure timely payments of your car loan and steady employment history are two factors that can make the likelihood of receiving your loan much greater.

Strategy 3: Using Lenders Who Work with Bad Credit

Most conventional lending institutions, such as banks and community credit unions, have very high standards in terms of credit ratings. Therefore, finding a car loan with bad credit from one of these lenders is difficult if not impossible. Therefore, you need to look towards alternative lending sources, such as online private lenders.

Private lenders who work through the internet generally specialize in granting loans to those with bad credit. They understand the particular strains of your situation and can work with you to find a solution.

Strategy 4: Co-Signers

If you still do not qualify for a car loan through private lenders, a last option is to find someone to co-sign your loan who has good credit. Only approach very close friends or family members about this option. Make sure that you can make the payments each month and that you have a backup plan should you fail to make your payments. Co-signers give lenders insurance in regards to your car loan repayment, but defaulting on a co-signed loan can mean ruining your co-signer’s credit as well.

Car Loans with Bad Credit

History teaches us many things. However, when it comes to loans, it is not the only indicator of success. Though credit problems in the past can limit your ability to find a suitable car loan, bad credit is not the end of the line. You can find a loan by using these four strategies.