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Refinance a car loan with bad credit
There are times when we all need a little extra help when it comes to our finances, and buying and then refinancing a car can be difficult if you have a bad credit rating, Difficult maybe, but by no means impossible, though you need to be clear about what you're doing when you want to refinance a car loan with bad credit.
It's not unusual for people to have, or have had, a poor credit rating at some stage of their life and there are a number of reasons this could have happened to you. There are, however, lenders who will look into your circumstances if want to apply to refinance your car, and as long as you demonstrate you are dealing with the issues, you may be offered a loan.
How does refinancing a car loan with bad credit work?
Put simply, when you refinance a car, you find a different lender to switch to. Your reason for wanting to refinance may be to do with a problem such as losing a job while paying off your original car loan. By refinancing, you get the opportunity to be offered a lower interest rate and payment options that may make your car loan easier to repay. You could also be offered low or no fees for application and set up of the refinancing loan. However, bear in mind that with bad credit, you may not be offered as rates as low as those for someone with a good credit rating. It's worth doing plenty of research first, or you could consult a financial broker to help you through the various details.
Why do people refinance car loans with bad credit?
If you have been struggling with car loan repayments due to circumstances that have led to a bad credit history, the option of refinancing is worth exploring. Although you won't find as many lenders willing to assess your situation as you would if you wanted a standard refinancing package, there are still many out there who may be willing to lend you money to refinance.
What are the main features?
As with any personal loan, your income and other assets will be assessed to see if a lender considers that you will be able to repay a refinancing loan and thus be eligible to borrow. You will borrow an agreed amount and pay it back over a set period, usually between one and five years, with regular monthly payments. Look for introductory deals that have no fees or lower repayments for a given time, but remember that you are very likely to be charged a higher interest rate than normal.
What are the pros and cons of refinancing car loans with bad credit?
Getting a refinancing deal that you can honour may help you to begin to improve your credit rating as well as lowering your repayments and giving you additional time to pay off the loan. Beware of any penalties imposed by your previous lender for paying off their loan early.
Senior Financial Writer
Mark Bristow is a senior financial writer for RateCity and an experienced analyst, researcher, and producer. Working for over ten years, Mark previously wrote and researched commercial real estate at CoreLogic, and has seen articles published at Lifehacker and Business Insider, among others. Most recently, Mark has joined RateCity working across finance as a whole. Whatever the topic, Mark’s goal is always to provide simple solutions to complex problems.
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