Refinance A Car Loan with Bad Credit
Refinance A Car Loan with Bad Credit
OK, your credit stinks.
However, you want a new car. So, you go to the local car dealership and believe the salesman when he says…
“Buy this car today at this high interest rate and we’ll refinance you in 12 months at the lowest interest rate possible.”
Everyday car dealers repeat the “refinance in 12 months: allegedly misrepresented to people with bad credit to push them to buy new automobiles at ridiculously high interest rates.
You may have financed an automobile through a high-interest subprime lender knowing that it’s a bad idea. But you might have thought it was your only option at the time and you justified it by telling yourself you could refinance to a lower interest rate down the road.
Unfortunately, when you try to refinance the car later on, you find out the salesman allegedly misrepresented to you.
Best Way for People with Bad Credit to Refinance
The first thing you need to find out is whether or not you even qualify to refinance, or if you should just sell or trade-in your car. Begin with how much your car is worth via “Kelly Blue Book” or “Edmunds”.
The biggest error most people make when establishing the actual value of their car is they base their research on the private party value. You need the trade-in or dealer retail value instead.
Here how to get the value of your car….
Remember that lenders who refinance usually will put up no more than 125% of the trade-in or retail value. The average amount is only 110%. So, if you are upside down on more than 10% of the value of our car, you have to pony up the difference prior to the lender giving you a loan.
If you need to calculate how much is needed to borrow to refinance, download the free Auto Refinance Worksheet and it will walk you through the steps to find out.
If you happen to not be in a position to refinance currently, there is another alternative-trade in your current automobile for another one with a manufacturer’s rebate.
Make Use of Manufacturer Rebates
A lot of auto manufacturers offer massive rebates to sell automobiles fast. There are gigantic incentives for a dealer to sell a new car.
You have to locate the highest rebate offer you can find and work toward trading in our car to eradicate any upside down condition.
Prior to going to a new car dealer, check out Edmunds and look up the rebate and interest rate on every new car and truck a manufacturer offers. This way, if the car salesman isn’t being honest with you (in relation to rebates and interest rate) you will know it.
Just go to Edmunds, and click on “New Cars,” then on “Incentives & Rebates.” You will have all the information you need.
It’s a bad situation when you’re upside down on a high-interest car loan that you want to refinance. However, you can get around it by purchasing a new car with a large rebate. You just use the rebate to offset the amount you owe on your old car.
If you come across a car with a higher rebate (highly recommended), you’re in an even better situation. If the rebate is high enough, it can wipe out the negative equity and you can use any remaining amount as the down payment.
The Secret Question to Ask the Salesperson
If you want to get a really amazing deal, try asking the salesperson this question:
“What car or truck on your lot do you need to sell immediately?”
If you’re upside down, ou need every advantage possible. Ask the dealership to sell you the oldest car in their inventory.
Some dealerships are willing to take a loss on cars they’re having difficulty selling because it costs more to keep them on the lot, as compared to selling them faster and taking a loss.
Many (not every) finance companies will require minimum score of 650 from the credit bureau they use to make a loan decision to refinance. But the only way to know each individual lenders policy is to ask.
Written by Brandon Coleman and Zain
www.killmybadcredit.com
Instagram: https://www.instagram.com/creditbosshog/