How to Refinance Your Car with Bad Credit

When seeking an auto loan with bad credit, it pays to be realistic. Although an auto loan is secured debt, and thus the easiest kind of credit to get, it can still be difficult to get approved. If you are approved, it can be difficult to get terms that are superior to what you already have. Although this process can be frustrating and require multiple attempts, it can save you hundreds or even thousand dollars in interest over the course of your loan.

Instructions

1

Research the current value of your car on Kelley Blue Book or Edmunds. Most banks will not refinance if you owe more than a certain percentage of the car's value. The specific percentage will vary according to how bad your credit is.

2

Save a little money. Paying down the amount you owe may be the only way to reduce the loan value to a point where banks will refinance your loan. Don't pay down until you know what your bank is willing to finance, but be prepared to do so. You can consider it a sort of "down payment."

3

Check your credit report. Take action to clean up any open complaints and be prepared to discuss all items on the report. Some loan officers will be willing to take an extra risk for people who can cogently answer to all the issues on their report.

4

Talk with the loan officer at the bank where you have your regular accounts. It costs much more to attract new customers than to keep existing ones. This means your bank will most likely go the extra mile to get you a loan. This may mean agreeing to allow it access to your accounts if you miss or are late with a payment.

5

Contact an auto dealer who specializes in bad credit car loans. Ask for the names of the banks they do business with. Work your way through those banks one by one.

6

Consistently work to improve your credit throughout this process. Put your bills on automatic payment so you never forget to pay on time. Pay down your credit card balances to establish a better ratio of debt to limit. Work to change unhealthy spending habits. If you keep doing this, every month that you don't get refinanced makes your credit more attractive to the next lender you approach.