Can I Replace My Current Car Loan with a Lower Interest Rate?
If you have recently purchased a car and the dealer prompted you to take a high interest auto loan that has high monthly payments, you need to refinance the loan to lower your car payments as soon as possible. You do not need to wait for any specific time period after getting auto financing, you just need to find a better car loan with more acceptable terms.
Alternatively, your credit may have been good when you applied for the loan, but the dealer told you this was the best interest rate you could get at that time. Unless you searched for financing yourself, you do not know if that was true.
Many dealers use loan companies that have higher than average interest rates to receive the credit incentive offered by the lender to the seller that you do not see.
They can also take advantage your FICO auto industry credit score by choosing the lowest score shown out of six to choose from. You should learn how your credit score to buy a car is evaluated. You do not deserve to pay the higher interest fees so a dealer can make a bigger profit off of your loan.
There are many banks and financial auto loan lenders that can offer lower interest rates to subprime credit buyers, making it possible to find excellent interest rates on subprime options. Valley Auto Loans is a leading loan broker that can find the best lenders for you so you can refinance your car as soon as you need too.
When Should I Refinance My Car Loan to Get The Best Loan Rates?
If it has been some time since you got your original bad credit auto loan. The interest rates may have dropped several points, creating an opportunity to take advantage of the new lower rates. If you have an APR higher than 7%, you may be able to do better.
If you have a variable rate on your existing loan, you will want to refinance that loan while the interest rates are low to get a fixed low rate. Fixed rate loans have a fixed interest rate that will not change throughout the course of the loan agreement so if the economy drops off your payments will stay the same.
Even two points can save you hundreds or even thousands of dollars over the term of the car loan. You can check this with the use of an auto loan payment calculator. As you put in the loan amount and the APR along with the loan terms, you will see what your estimated payments will be. You will also see how the loan term will affect your new monthly payments.
Cash Out, Car Equity Loan with Bad Credit
If you are struggling with your budget to make your monthly payments, reducing your car payment is the best way to adjust your cash flow without affecting your lifestyle.
Replacing your bad credit car loan can extend your loan term and lower your monthly payments without hurting your credit. Alternatively, you can remove some equity with a “cash out refinance.” You will need to know your present car resale value versus the amount you will owe before committing to this type of loan, or you could go upside down with a car loan.
Are All Upside-down Refinancing Loans A Bad Deal?
No. Not all refinancing loans to get cash out are financially dangerous! Even if you owe more on the car than it is worth, some car refinancing can be a huge benefit.
Suppose you need money for something important like legal fees or unexpected travel costs. Most people would have no choice but to take out a personal loan from their bank.
If you compute the finance charges of a personal loan vs. the finance charges of a car refinance loan, you will see that car loans are always a better deal than personal loans. Also, it is easier on your budget to have one car loan payment a month instead of two loans.
Even if it appears that you owe more for your one car loan than the car is worth, it is a better deal than owing money on a second, unsecured loan.
If you had bad credit or had not established any credit at the time you bought your new car, you are probably paying too much for your high-interest car loan. You can take advantage of your improved credit score and refinance your auto loan with bad credit for a new car loan with a better rate.
Don’t know your credit score? You can check your credit score right here for free.
If you are involved in a dispute settlement, divorce or separation settlement, child custody or drawing up a will, you will need a highly skilled lawyer. A car refinance is one of the best ways to get that large amount of money it takes to pay for legal fees.