7 months ago ·
by Richard · 0 comments
How To Refinance A Car Loan With Bad Credit
One of the most commonly asked questions in the lending world, is : How to refinance a car loan with bad credit? While it may be more difficult for people with bad credit to refinance car loan rates, it’s not impossible. People with bad credit have options to refinance car loan rates, just like people with good credit do. But the interest rate (APR) they pay will be much higher.
Good Credit Refinancing APR : 4.75%
Bad Credit Refinancing APR : 13.21%
The problem that people with bad credit run into, is they can’t justify refinancing as much as they would like. However, the CRUCIAL parts of refinancing for the better are definitely there. Even borrowers with bad credit get lower monthly payments and extended payment terms that make the whole refinancing effort worthwhile.
Here Are Some Ways To Defeat The “Bad Credit” Refinancing Blues
When people in bad credit situations refinance their car loan, they should DEFINITELY have a structured plan in place to ensure they get the most from their refinancing effort. For people with bad credit, this may seem like a foreign language and/or daunting task. Being proactive has a learning curve, but is easy to adapt to. Below, we’re going to outline a few key ways to beat the “Bad Credit” refinancing blues. Relax! We’re here to make it easy for you!
1. Use Your Loan Refinancing To Save Yourself The Most – Understand that refinancing with bad credit means you’re obviously in a bad financial situation, to begin with. That said, figure out how to use your lower interest rate and/or extended loan repayment terms to your advantage. If your lower monthly payment allows you to buy advance supplies to help you solve some really big problems, great!
But really put some thought into your refinancing effort and prepare to discipline yourself. But, also understand that depriving yourself of every day “creature comforts” is dangerous and NOT ADVISED! Many borrowers have learned the hard way, that attempting outlandish financial disciplines during times of trouble, usually equals, you guessed it : EVEN MORE TROUBLE!
Use the refinancing to fix your financial situation the best you can, yes, but remember, any “crazy” changes you decide to make during loan repayment can go on for years, and if you mess up, you could spiral out of control! This can easily lead to serious impulsive decisions because you have no clue what to do! Dedicate yourself to looking at your refinancing like only a “small boost” to improve your situation. It’s safer to think this way because small financial success leads to bigger financial success through what’s called : “Baby Steps”.
2. “Baby Steps” Are The Key To Refinancing Success – Many borrowers in compromised financial situations are ignorant of the fact that one small success can easily lead to another. For example, Borrower A is used to spending tons of money on electric and gas costs to heat their home. But with their new refinance car loan rates, Borrower A is able to afford medicine to greatly improve their health status. From there, staying warmer is easier to do, so less gets spent on heating costs. This is a prime example of “Baby Steps” in action!
Another good example is : Borrower B desperately needs to take advantage of bulk food purchasing to escape paying retail cost for food time and time again. Through car loan refinancing, Borrower B’s bulk food purchasing leads to extra money being available. This allowed for the purchase of replacement car parts to keep his vehicle in great shape. So you see, one good event leads to more good events. Like a snowball growing bigger as it rolls downhill! “Baby Steps” may take time to achieve, but for people with bad credit, these “snowball-type” opportunities to get ahead are a LIFESAVER!
3. Use A Cosigner With Better Credit Than You – Having a cosigner with better credit than you improve your chances of being approved. If a lender knows you’ll most likely pay back the loan, but if for some strange reason you don’t, your cosigner will be right there to take over the payments.
4. Improve Your Credit Score BEFORE You Apply – You can improve your credit score in a variety of easy ways. Eliminate credit card balances (or at the very least keep them 30% or lower), pay your bills on time, don’t erase your successfully paid debt history, avoid risky spending or activities (these leave traces behind that frighten lenders), and regularly check your credit reports for changes. You can also set up an emergency fund for yourself, made up of 6 months of your yearly salary. This will eliminate the need to take out a loan if you experience a period of financial hardship.
Hard credit inquiries hurt your credit at a rate of 4-10 points each. The fewer applications you fill out the better because each one results in a hard inquiry. Only apply when you’re absolutely sure you’re prepared.
7 months ago ·
by Richard · 0 comments
Credit Union Car Loan Rates
Low credit union car loan rates can help you secure a loan with payback terms you can afford. Unlike other loan lenders, credit unions have the lowest rates of all. Instead of the usual 4-7% interest rate, credit union interest rates hover around 2.75%. Thanks to credit union car loan rates, average people can refinance their current car loan with ease, while at the same time enjoying a low-interest rate that doesn’t punish them for refinancing in the first place.
One of the most important things to remember about car loan refinancing is to pay back the loan on time, according to terms. It only takes a single loan default to hurt your credit score. And if you default on multiple loans, you can be barred from acquiring additional loans in the future.
Refinancing Makes Sense! Lower Your Monthly Payments!
The whole idea behind refinancing is to lower your interest rate, and thusly, your monthly payment amount becomes lower too. You may be able to do this with your current lender, but if not, there are other lenders out there who can help.
And refinancing makes good financial sense, especially in limited budget scenarios where the extra cash comes in handy. However, borrowers should be aware that car loan refinancing can be difficult to accomplish because of the following 3 factors :
1. You Can’t Borrow Enough To Pay Off Your Original Loan
Most people with car loans owe more on the loan than the car or truck is worth. This is due primarily to age/wear and tear, so borrowers should be aware that in order to make refinancing work out in this scenario, they would have to have a few thousand dollars lying around to cover the remaining amount of the first loan. But if a borrower has this money handy, refinancing is definitely a beneficial action to take.
2. Your Car Or Truck Is Too Old / Not Worth Enough
Refinancing makes sense, but with older vehicles, you’ll find that the interest rate increases along with the age of the vehicle itself. If your vehicle is new (1-2 years old), you can acquire refinancing between 4-5% easily. But as vehicles age, the interest rate advantages associated with refinancing become less and less.
3. Your Credit Score Is Too Low To Qualify
When it comes to credit union car loan rates, your credit score means everything. On average, buyers with really good credit pay only about 4% in interest rates (according to 2010 statistics). Whereas people with bad credit pay an average of 13.1%. Make sure your credit score is good enough to legitimize your refinancing effort, or you may find the interest rate defeats the refinancing effort entirely.
Tips You Can Use To Keep Your Borrowing Power Strong And Healthy
1. Don’t Extend The Length Of Your Current Loan – Many people make the mistake of extending their original loan terms beyond the original payback period. While extending your loan time span while refinancing can have its advantages, statistics show it usually creates more of a problem for borrowers than a benefit. The more time borrowers spend with an active loan in place, the more chance they could run into sudden financial problems.
2. Don’t Agree To Outlandish Fees Or Up-Front Charges – A reputable lender will only charge you the necessary fees to cover the cost of the application and paperwork process. Some lenders even go as far as paying you for the chance to refinance your vehicle. If the terms of a refinancing contract are “out of this world” expensive, stay away from it.
3. Do Everything You Can To Improve Your Credit Score – The higher your credit score, the lower your interest rate will be when taking out a loan. And you’ll find that a good credit score allows you to secure loans at rates FAR below the average rate.
Credit Union Refinancing Loans Come With Tons Of Great Features
Compare and save! Refinancing with credit union car loan rates comes with tons of great features! Rates starting as low as 2.75%, no payments for 90 days, no application fees, easy payment options, flexible loan terms of up to 75 months, 100% financing for qualified buyers, no pre-payment penalties, and much more!
And there’s never been a better time to refinance car loan! Borrowers who act immediately to refinance car loan rates do the very best. You can get a lower interest rate, lower monthly payment, and pay back your original loan with ease! From there, you can use the money you save to live well across the entire length of your new loan repayment. Statistics show that people who live well/treat themselves well during their loan repayments pay back their loans more successfully.
Credit Union Car Loan Rates Give You A Second Chance!
It’s no secret that taking advantage of super-low credit union car loan rates gives you the best chance at making your refinancing work out the best. The world we live in DOES make it difficult to refinance a car loan in order to save money, but with a good credit score, a newer vehicle, and access to super low credit union rates, you can really make it happen!
7 months ago ·
by Richard · 0 comments
How Does Refinancing A Car Work?
A frequent question many people ask when searching for ways to refinance their vehicle is: How does refinancing a car work? Quite simply, refinancing a car is as simple as taking out a loan to pay off the original. Only with car refinancing, the goal is to secure a loan that provides a lower interest rate than the first one. This way, borrowers can lower their monthly payments, and enjoy a better quality of life while still making their payments on time. The extra money “freed up” from the lower monthly payments can be used to meet other financial obligations as well.
Here’s a quick example: Sara has a really good credit score of 756. So, she took the opportunity to use her good credit to qualify her for a credit union car refinance loan rate of 2.75%. Her previous loan terms had a set interest rate of 4.21%. The 4.21% rate is right on par with the national average for auto loans. The 2.75% allowed Sara to pay her monthly bills in advance.
By paying her bills in advance, Sara freed up enough money from her paycheck to purchase a new refrigerator for her home. Her old refrigerator was vastly inefficient and on the verge of breaking down. The new, energy efficient model actually ended up paying for itself in terms of energy savings. So, it was a win-win with her new loan and it allowed her to furnish her home needs as well.
Is Car Refinancing Right For Me?
If your credit score is good, yes! People with the highest (best) credit score are always able to find lenders more than happy to refinance car loan rates with super low APR’s. Below 600 is too low to qualify for rates to justify refinancing, but if your credit score is above 600, go for it! A good credit score can get you a loan with an APR as low as 2.75%!
Car refinancing is perfect for people that are trying to build their finances, and need as much capital as they can get on hand. For example, someone who just got a new job with a higher salary, after years of working dead-end jobs, would, of course, want to be on the “fast track” to building a brand new existence. And everyone knows, that buying in bulk, having backup/emergency supplies, being able to represent a good salary with niceties, etc., is key to keeping a good job in the first place.
People with a 600 credit score, or just below that, need to recognize that building good credit is the key to a “lenders heart”. Simply put, if a lender review agent sees that your score is below 600, you won’t be approved for a low APR. In fact, many lenders employ an automatic disqualification process that denies applications from borrowers with low credit scores.
So what’s the solution? Be proactive! Start building good credit any way you can, right now, and don’t stop until you’ve achieved a score that lenders respect. A 720 credit score is excellent, so shoot for a score that high, or even higher if possible! A successful mortgage loan repayment is a good example of a genuinely respected element of someone’s credit history. A previous successful auto loan repayment is another.
Here are A Few Awesome Tips To Refinance Car Loan Rates
1. Before making the move to apply for a refinancing loan, make sure to close any old accounts you may have floating around that are not in use. By doing so, lenders see that you take good care of your credit and that you tie up “loose ends” before making major financial decisions.
2. Have all your car information, as well as all the information about your current loan, ready to transfer to the new lender. The lender will inspect your current loan, and make sure that it’s safe to proceed in helping you with your refinancing effort. With all information at your fingertips, the lender will have less of a reason to reject your application.
3. A previous history of a successful car loan or home mortgage repayment looks exceptional to lenders. If they see you’ve already been through the process of repaying commonly experienced loans, you’ll have a much better chance at refinancing approval.
4. Having a clean credit report helps too, with no charge-offs present. Just because a creditor has ceased all efforts to collect a past debt, that doesn’t mean a lender will ignore it. Lenders have to consider ALL factors when forecasting whether or not you’ll make good in repaying your loan.
5. It may not show up on a credit report, but lenders have many ways of researching and discovering facts that have an impact on their lending decision. Such as, whether or not you have a good job/work history, whether you’re an upstanding member of the community and many other events that indicate the likelihood of loan repayment.
Hopefully, this article has answered your question of: How does refinancing a car work?