Previously on the blog, I’ve talked about getting a car loan with bad credit.
What some people with bad credit may not know is that they can also refinance the loan, even they have bad credit.
Here are 4 ways you can refinance your car if you have bad credit.
1. Prove you’re in a better credit category
If you’ve been paying off your bad credit car loan on time and haven’t missed a payment, financiers may re-classify you as someone with better credit or “correctible credit.” Put simply, you’ve shown a financier or lender that you are capable of repaying a loan and are committed to having good credit. Once financiers can see that you are a good borrower and a lower risk, more finance options and lower interest rates will open up for you.
2. Trade in your vehicle and pay out the bad credit loan
If you have been a good borrower, one option that you can take is trading in your financed vehicle which pays out the bad credit car loan in full. If you’re now in the “correctible credit” category, you can look to upgrade or change your vehicle. You’ll get a new loan and most likely a better interest rate.
3. Increase your income
Another sure-fire way to prove to lenders you’re a lower risk is increasing your income, or proving your income has increased since you took out the original bad credit car loan. More income for you shows you are a lower risk to financiers and motor vehicle loan lenders. If you can earn money by working overtime or taking another job, lenders that once said “no” may have changed their mind.
4. Pay down other debts
Another cloud that hangs over people with bad credit is high levels of personal debt such as credit card debt. If you can work to pay off your credit cards, your credit rating will improve. This is the first step on the path to solid, good credit. Good credit means more refinancing options and better deals for you.
If you’re unsure, don’t fret. Talk to a financial professional to discuss what refinancing options are available for people with bad credit car loans.
This professional post is brought to you by www.badcreditcarloans.com.au