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Refinancing a Car Loan with Bad CreditMany people want to refinance their car loans so they can get a lower car payment, or to lower their interest rate. If you have bad credit this task becomes a little more difficult, but not impossible.When refinancing a car loan refinancing companies looks at the value of the vehicle versus the requested loan amount. If you have great credit, lenders are willing to let you borrow a little more than the car is worth, if you have bad credit, car loan refinance companies are not willing to let you borrow more than the used car auction value of the vehicle. So if your credit is rough and you would like to refinance your used car you should research a few items first so you can estimate the likelihood of getting approved. By doing the research you can avoid unnecessary inquires on your credit report. |
Apply for car financing by entering your zip code.
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First, call you current used car finance lender and ask for the payoff amount. Next,
estimate the trade in value of your vehicle. There are a few websites where you can
do this, the two most popular are KBB.com and NadaGuides.com. Aside from the far western
states, most lenders use NADA instead of KBB values when valuating a used cars value.
Once you have these two numbers divide the payoff by the value, this is the Loan to Value amount. If you have bad credit and the payoff is a lot higher than the trade in value you have negative equity and the result will be a number higher than one. When this is the case, chances are that you will not get approved for car loan refinancing. |
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