By Everett Maclachlan
An auto loan refinance works much the same way a mortgage refinance does. Basically, you are exchanging one loan for a new loan with terms that better suit you. The new loan may have a better interest rate, or it may allow you to change the amount due on your monthly payments.
At the end of an auto loan refinance, you could choose to end up with a larger or smaller loan balance. For example, someone who has “equity” in their car (i.e., who owes less on the current loan than the car is worth in terms of resale value) may choose to actually increase the size of their loan in order to get access to some extra cash.
On the other hand, someone else may refinance in order to reduce the size of their monthly payments, either through qualifying for a lower interest rate or by actually paying down the loan a bit for the sole purpose of reducing payments.
Auto loan refinancing can be certainly done through your existing auto lender, but it makes sense to shop your refinance around in order to get the best-possible deal. If you have bad credit, it will be wise to learn how to go about getting a bad credit auto refinance, since the rules are a bit different for bad credit individuals.
If you are interested in learning more about bad credit refinance auto loans, these 5 tips can help:
1. For most auto lenders, a bad credit score is a deal-killer:
As you may already know, most auto lenders who work with loan refinancing focus on one thing and one thing only: the borrower’s credit score. If you have a score below 600, you will have trouble getting a good rate with these lenders. And, if your score is below 550, you may not get approved at all.
2. If you have bad credit, you need to learn how to use it to your advantage:
Most bad credit individuals who figure this harsh fact out just give up on the spot. However, you can actually learn to use the fact of your low FICO score to your advantage. That is because some car financing companies actually look for people like this as their ideal customers.
3. Start by targeting bad credit refinance auto lenders:
You will want to start your search for the right lender by looking for auto refinance lenders who actually advertise themselves as being “bad credit” lenders. That is your tip-off that they are geared toward looking beyond the credit score to extend a refinancing loan.
4. Prepare yourself to answer questions about your credit report:
These lenders may still refer to your credit report during the application process, so be sure to run your report well in advance of applying with any of the lenders. Be prepared to explain about any major glitches on your report.
5. Be ready to discuss other aspects of your life and career:
While lenders reviewing your application will never ask you anything too personal, they may well ask questions about your employment history (past and current), as well as about your residential history (e.g., do you rent or own?, etc.).
Follow these 5 tips as you apply for auto refinance loans, even with a low FICO score.
About the Author: Get a list of bad credit auto refinance lenders in your area at:
Bad Credit Auto Loan Guide
.
Source:
isnare.com
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