How To Refinance A Car Loan With Bad Credit?
There are ways around this though, as long as your current bad credit car loan has been conducted well and you have not had any missed payments when they were due.
The option to do a straight refinance so that you can keep your current car may not be available though. Of course, if you are stuck in a very high interest bad credit car loan, you would like to reduce your interest rate.
An Option To Get A Better Deal
The option that is available will require you to trade in your current vehicle, to payout your existing bad credit car loan. You can then look at upgrading your vehicle and financing the new vehicle with a much better interest rate, as now you would have, what is referred to in the industry as “correctable credit”, and there will be more options in regards to which auto financiers will look at approving a car loan than when you initially took out your bad credit motor finance.
What Is ‘Correctable Credit’?
Correctable Credit is the term used when a client that previously had poor credit history was able to improve their situation by conducting a bad credit loan after the credit issues appeared on their credit file. This shows lenders that mistakes are made and that this client has learnt from those mistakes and has now been able to prove themself.
Many lenders will not “put their hand up” to be the first to approve auto financing once adverse credit history is present on someone’s credit file. The lenders that would will usually charge a higher interest rate for that risk. Once lenders can see that you have had “correctable credit”, a lot more options open up, which allows you to negotiate a better car loan deal.
The only other real option would be to apply for an unsecured personal loan to payout the bad credit car loan. Often these rates are higher than standard car loans, but are still less than many bad credit car loan interest rates. The only problem with this option is that it is much more difficult obtaining approval for this kind of financing, due to the lender taking on more risk, as they won’t have the security of the car over the loan.
CarLoans.com.au can provide you a free car loan assessment, this assessment will determine what loan product suits your needs best as well as providing you with the interest repayments - click here to get a free assessment.