Bad Credit Auto Loan Refinance - Tips to Increase Your Odds
of Getting Approved
Plan to refinance your auto loan but have bad credit? You can still
find financing at reasonable rates by searching online for your
lenders. Researching rates and terms will lead you to a good deal,
saving you money each month. Increase your odds of getting approved
for the best loans by following these tips.
Think About A Co-Signer
The better your credit score, the better your rates. So if you
don’t have great credit, look for someone who does. By having
them co-sign for your loan, you can find yourself qualifying for
much better rates. Lenders look at your co-signers record, but you
pay for the loan.
If you are a couple, you may also choose to use the person with
the best credit score to apply for the refinance auto loan. You
can find out who has the better record by requesting your credit
score online.
Update Your Credit Report
While you can’t change your credit report overnight, you
can be sure it is in the best condition possible. Take a few minutes
to review your free copy and make sure all information has been
updated. You may also want to include an open letter explaining
any reasons for your bad credit score. Mitigating factors, such
as a job loss or illness, are sometimes considered by lenders.
Eliminate Old Debt, Hold Onto Cash Assets
Besides your payment history, lenders also look at your debt and
cash assets when considering your loan application. The less debt
you have, the better you look to lenders – especially if you
have a high income.
Cash assets are also important. Lenders like to see at least six
months of cash reserves in the bank. This can mean a savings account,
money market, or CD.
Be Honest With Your Information
More than likely, you will be approved for refinancing. What rates
you qualify for depends on your information. So to get the most
accurate loan estimate, be honest about your credit background.
That way, when you actually apply for the loan, you will be approved
for the rate quoted.
Remember too that not all lenders charge the same rate. A careful
search will bring up favorable rates, even for those with poor credit.
Sub-prime lenders often provide loans on a point or two above conventional
rates.
compiled by: Carrie Reeder
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