People looking to refinance an auto loan with bad credit probably have many questions. Consumers wonder if they are eligible for refinancing packages and if the benefits of doing so are worthwhile. There are many advantages to refinancing. The money saved can be used to pay off other debts. Even if the current automobile loan rate is just two interest points higher than the rate offered through a new financing package, hundreds or even thousands of dollars can be saved.
A plethora of auto loan companies on the Internet offer the option to refinance an auto loan. Simply fill out the online application and, even with less than perfect credit, consumers can qualify to refinance their vehicle loans within minutes. There are some common guidelines that must be met in order to qualify to refinance an auto loan with bad credit. For example, the borrower must be at least 18 years old. Any bankruptcy in the borrower's history must have been discharged for a period of 2 years, and a repossession must be 12 months or older. The income requirements will vary from one auto loan company to another, but a general guideline is that the total combined gross income must be anywhere from $1200 to $1800 per month. This amount is often a bit less for those in the military.
Some other requirements include being current on any other account payments and having made at least three payments on your current car loan. Some auto lenders will not refinance on vehicles used primarily for commercial purposes. They may also decline the application if the vehicle is more than ten years old or has more than 100,000 miles registered on the odometer. Normally, no lease or line-of-credit conversions are allowed. Additionally, the vehicle must be registered in the state of your residence and the registration must be valid for at least 30 days in most states. Also, be prepared to refinance an auto loan with bad credit by providing at least one year's worth of proof of employment and residence.
People with low FICO scores will pay higher interest rates. Keep in mind that the interest rate borrowers are offered is largely influenced by the history with other loans and charge cards. If someone with a good FICO score co-signs to refinance an auto loan with bad credit, the chance of obtaining refinancing with a lower interest rate increases. However, many people with good credit histories are advised not to co-sign loans for anyone, especially for people with poor credit who pose a risk to the co-signer's credit report. "Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law."
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