Applying for a refinance auto loan may seem like a strange concept to many. However, maybe, the original loan is keeping you from saving money at the moment. If you are already having trouble saving funds with original loan, why start from scratch with an entirely new loan? You would think common sense would kick in at some point so you can make a different decision…right?
Actually when you apply for high risk auto refinancing, the exact opposite happens. You are giving yourself a break by re-negotiating the terms of your first auto loan, and you be able to lower your payments. If you choose to work with Valley Auto Loans, who provides auto refinancing for poor credit, you can reduce your interest percentage and monthly payment amount significantly. They have a knack for getting funds to people who are incapable of receiving loans.
- High risk car loan lenders offering car loans to drivers with terrible credit problems is a very smart move. Because of the challenging economy, huge groups of people are struggling to keep up with basic expenses. Many of these individuals maxed out several credit cards just to maintain their lifestyle. If these people could not pay off their credit cards promptly, they either went into consumer debt, or they filed bankruptcy to remove the debt.
Both scenarios can put a negative mark on an individual’s credit history for several years. Bankruptcies last for seven to ten years on average. Once these marks reach your credit reports, they are difficult to remove–even if you settle the debt on a later date. It is a terrible situation to live through. It would be ideal if these marks went away after you paid these debts in full.
Unfortunately, they do not, which means the debt can still affect you negatively even after you clear it. No lender will want to work with you unless they truly understand what you are going through. The only lenders who may be sympathetic towards these situations are high risk auto re-financiers.
These alternative car loan providers are serving a group of people who were left out of the traditional lending process. In addition to rewards from obtaining mass amounts of business, they also get to help unfortunate people who need immediate help. Through second-chance financing opportunities, these lenders can provide assistance in one of two ways. They can find funds for men or women who do not qualify for bank loans, and they can refinance an existing loan that has a high-interest rate.
It is nearly impossible to receive a bad credit auto loan for an interest rate that drops below 20%. The average bad credit lender will take advantage of their borrowers because they know the person may have no other options. Luckily, this misconception is false because companies such as Valley Auto Loans are giving quality options to desperate borrowers. They can help a person save thousands over time just by reducing this 20% rate by a few percentage points.
Have Your Info Ready
You will need to provide some personal information to shift your current loan to your new financier. You will need to present all information from your current lenders, such as your contract, your monthly payment information, vehicle mileage, and any other information that may be pertinent to the loan. In certain cases, you may need to pull your free credit report from one of the three giants or credit reporting agencies known as Experian, Equifax, and TransUnion.
Your new high risk auto refinancing provider will go to your original lender and negotiate a term of release on your behalf. This is not a general shift of ownership like you may find in the mortgage lending world. Your new refinance lender is taking control of your loan for the purpose of giving you an advantage.
Some of you may be wondering how this high risk car refinance beneficial to you in the short-term. Can this deal put immediate funds in your pocket so you can start the money-saving process? The answer is yes. However, it depends on how much equity you have in your current vehicle. Any bad credit refinance with cash back can put money in your pocket. You stand to receive a higher amount if you had your car for at least eight months or longer.
The costs you can save in the long-term through high risk auto refinancing will vary with lending institutions, interest rates, and loan duration. This does not negate the fact that your interest rate will drop significantly. We can use approximate values offered by Valleyautoloan.com to get a better understanding of how the savings will transpire. These rates could change at any time, but they will always be less than the bad credit standard of 20%
For high risk auto refinance loan amounts between $7,000 and up:
- 36-month leases will have interest rates of about 3.65%
- 37 – 48-month leases will have interest rates of about 3.65%
- 49 – 60-month leases will have interest rates of about 3.25%
- 61 – 72-month leases will have interest rates of about 3.50%
- 73 – 84-month leases will have interest rates of about 3.65%
What does this mean in dollar value? An individual with a $10,000 loan will have an interest rate of 20% with an ordinary lender, which adds up to $2,000 per year. With ValleyAutoLoan.com, this same dollar amount will have a rate of 3.65%. This adds up to $365 per year versus a couple of thousand. The difference is $1,270 per year, which is a very hefty sum. Over a 60 month period, this $1,270 will turn into $6,350 in savings.
It is best to apply with a refinance company that deals with high risk borrowers. Prepare yourself to collect personal and relevant information such as proof of income, the remaining balance of the current loan, and the title if possible. Once you qualify for refinancing, you can prepare yourself for the significant amount of savings you will receive.