Although you now know that you can save money and build equity faster, we want you to know why. Please read on for the details.
How It Works
Get everything you need to know about bad credit auto refinance loans here. We'll explain what it is, when it makes sense, and what the pros and cons are.
Bad Credit Auto Refinance Loans Explained
Auto refinancing involves paying off an existing car loan with a new one. With bad credit auto refinance loans, the process is specifically geared for consumers with poor credit. Typically, you fall into the "bad credit" category if you have a credit score of 620 or lower. When you get bad credit auto refinance loans, your new lender pays off your existing loan, and your car title is then transferred to the new lender. After the transfer, you make monthly payments to your new lender.
When Refinancing Makes Sense
Especially if you financed through the dealership, your current auto loan may not be ideal. Dealers are notorious for inflating interest rates to make a hefty profit on the loan. Although convenient, dealerships can rarely provide the best deals on auto loans. You are better off using an independent site like ours where you can compare bad credit auto refinance loans from many different lenders. In this way, lenders must compete for your business. Examine the refinancing process on the next page. You might consider bad credit auto refinance loans for the following reasons:
- You can get a lower interest rate with bad credit auto refinance loans.
- You can lower your monthly payments.
- You are currently upside down in your loan. This means that you owe more on your existing car loan that your vehicle is worth. Bad credit auto refinance loans can help you get out of this situation.
Potential Drawbacks
Although you stand to save a lot of money with bad credit auto refinance loans, there are some potential drawbacks to refinancing, though they are fairly minor. For one, when you take out a refinancing loan, as with any loan, your credit score will drop slightly. Secondly, you will have to pay certain fees to refinance your car loan. Bad credit auto refinance loans usually require you to pay lien holder fees ($5-$10), state re-registration fees ($5-$75), and possibly prepayment penalties (varies by lender). However, because these fees are so small, the loan will quickly pay for itself after a few months' worth of savings on interest expense. Thus, if you have an auto loan that you are not satisfied with, it's a good idea to at least consider bad credit auto refinance loans to see if they could save you money.
