Bad Credit Auto Refinance – A Blessing or a Myth
To lessen your car payment, you have several options. You can try to refinance the loan to lower the interest rate or to extend the term of the loan. You can consider selling your car and buying a less expensive car. Instead of buying a car, you might consider leasing it. Bad credit auto refinance is offered by many financial institutions in the United States. This program is legally supported by the state and federal governments. The primary advantage to refinance a car with bad credit is to lower your monthly car payments and to save money over the term of the loan. Extend your loan term so you pay less each month over a longer period. Paying a handsome down payment on the new loan will help in qualifying for lower interest rate. With interest rates remaining so low, an auto loan refinance may have crossed your mind and it could be a good idea. It could save you hundreds of dollars, sometimes thousands over the life of the loan. If your current car loan interest rate is above 6%, you should investigate refinancing option. Get more information about bad credit auto refinance here.
Collect your documents. Find a recent payment stub from your current auto loan and make sure to follow these steps:
· Evaluate your credit history
· Do calculations
· Decide whether refinancing makes sense
· Evaluate the terms of your loan
· Complete the process
If you have challenging credit then Bad credit auto refinance is good for you. A low credit score means a double-digit interest rate on your refinancing car loan. If your payments are on time with your current lender and the rest of your credit is healthy - or at least healthier than it was, you should consider refinancing. If your credit score is under 629, it will be considered as low. You can have low credit for a variety of reasons, including a history of making late payments to the lender, identity theft or simply not having enough years of credit history. Your credit score
says what type of interest rates you will get on your car loan, and mind it a low score means a higher interest rate.
When It's a Bad Idea to Refinance?
If you are currently set to pay off your loan in 36 months, refinancing to 48 or 60 months is usually a bad idea. This change may seem attractive as it will lower your monthly payments, but a longer loan term means you will pay more money in interest. Use money from a tax refund or bonus from the work to help pay down for your loan faster. The best formula is to divide your monthly payment by 12 and add this figure to all your future monthly payments. For example, with payment of $354.15 if divide it in 12 months it comes to 29.51. Add $29.51 to your regular payment of C$354.15, it comes to $383.66. Now your payment would be increased to $383.66 each month. This formula may help you to pay your auto loan without applying for bad credit auto refinance.