Getting your loans refinanced is a good idea if you feel that you are unable to manage your monthly payments properly or are running behind on payments due to the large amount of outstanding loan balance you have built up. Auto refinancing is apt for people who find themselves in a bad credit situation since this helps in saving money and opening up avenues for payment of other crucial loans. If you are currently going through a bad credit phase, then you should definitely get your auto loan refinanced. Loan refinancing is the process where you go to a new lender and ask him to pay off your auto loan in full. Once this is done, you only end up owing the new lender who generally gives you a lower interest rate and smaller monthly payments than your previous lender. This helps you in managing your finances better by paying off high interest loans (read credit card payments) and building up your credit score.
Are You Eligible For Auto Loan Refinancing?
There are a large number of companies who offer auto refinancing options to people with poor credit scores. However, in order to qualify for an auto loan refinancing, you need to be current on your previous auto loan payments and the value of your car needs to be higher than the amount of your outstanding loan. Many companies would require your loan to be at least one year old before they refinance it. In case you have filed for bankruptcy, then this should have been at least two years before, and at least an year should have passed after any kind of repossession. Apart from this, you need to be above eighteen years of age and have a regular source of income. The minimum regular monthly income that would qualify you for an auto loan refinancing is at least $1200, but this keeps varying from company to company. If your situation confirms to all the above criteria, then read on to know more about auto loan refinancing.
How Do You Get Your Auto Loan Refinanced?
Once you qualify the eligibility criteria, getting an auto loan refinancing is easy since a large number of companies offer these services and competition is high. Make sure that you know your credit score, FICO score and the current market value of your vehicle since all these factors will greatly influence your rate of interest. In case the market value of your vehicle is lower than the amount of your outstanding loan, then your chances of refinancing are next to nil. Shopping around for your refinancing can end up saving you a lot of money, so take quotes from as many firms as you can and do not forget online companies, since these are the ones that offer the best deals. Remember to sign on a loan only after you have carefully read through the terms and conditions. The fine print can hold a lot of surprises if you are not careful before signing.