Should you get a new loan if you have bad credit? Yes, but only if you can get a savings account with a lower interest rate or if you need a lower monthly payment. Since there are so many lenders competing for your business, you can usually find good rates and terms for auto refinance loans even if you have bad credit.
Your credit score may have gone up.
If your credit score has gone up since you first got your car loan, you might be able to get better rates. Your best friend when it comes to seeing your credit score improve is time. After two years, bad things like a bankruptcy or foreclosure no longer have a big effect on your credit score.
Your score can also go up if you make changes to your income, investments, and cash reserves. Your score will also go up if you pay down your overall debt.
Have you recently looked at the rates for auto loans?
Compare loan quotes to find out if you can get a better deal on your auto loan. You can get several offers from broker sites in just a few minutes. You can also look at rates from different lenders.
No matter what strategy you choose, don't give anyone your credit report when you ask for quotes. If you don't, your credit score will go down because of all the credit checks. Make sure to say that you want a refi loan when you ask for loan estimates.
Will you save money or gain something?
Even if the loan offer is really good, you need to make sure that refinancing will save you money. Take the best loan offer you can get and figure out how much it will cost you in interest and fees. Compare that to how much interest you still owe on your car loan.
If you don't have much time left, you might not save any money even if the rates go down. But there are still times when you might want to refinance. One way to lower your monthly payment is to make your loan term longer. If you want to keep the car in your name after a divorce, you may also choose to refinance.
When you decide to refinance a car loan, you should have all the facts you need. Check out the loan offers and compare them to the loan you already have. Then you can figure out what your best choice is.
