How to Modify Vehicle Loan With Poor Credit

If you have poor credit, but the current terms and interest rate on your vehicle loan are unfavorable and causing you to spend more money than you would like, you may still be eligible to modify your vehicle loan by refinancing. Although poor credit will always prevent you from getting the best possible rates, it does not have to hold you back from being approved for a better interest rate than you now have. In addition, you may wish to modify the terms of your loan, such as by extending the repayment period, to lower your monthly payments.

Instructions

1

Contact your current lender to find out if it is willing to modify your loan by extending the loan or temporarily modifying your payments. Some lenders are willing to work with individuals who are facing financial hardships to help them avoid a repossession. You might be able to avoid refinancing with a cooperative lender.

2

Evaluate how much you owe on your vehicle loan to make sure the loan itself qualifies to be refinanced. According to Credit.com, if you owe less than $7,500 on your current loan, lenders may be hesitant to offer you refinancing regardless of your credit score.

3

Find out your credit score. If you have not checked your credit recently you may be surprised to discover that it is not as bad as you think. Negative items on your credit report will fall off on their own after a certain period of time and your score will improve. Pull your FICO scores from myFICO.com, as these are the credit scores lenders will review--not the consumer credit scores offered by the credit bureaus.

4

Ask someone you know that has good credit to cosign a new loan. If a cosigner appears on the loan, you will be a lower default risk and your lender is likely to offer a lower interest rate on your new vehicle loan.

5

Prepare to provide collateral for a new lender. Collateral secures your loan and gives the lender something to seize if you fail to make the payments. Although the vehicle itself serves as a form of collateral, if you owe more on your current vehicle loan than you car is worth, providing extra collateral may be necessary.

6

Shop around. Even if one lender gives you a lower rate than you now have, another lender may offer even better terms.

7

Consider Internet lenders. Lenders that offer to extend vehicle loans and vehicle refinancing over the Internet often have different standards than banks and credit unions. Buyers with poor credit can sometimes find better deals online to modify their current vehicle loans.