Refinance Auto Loan Bad Credit

Having a bad credit rating due to previous problems managing credit should not stop you from refinancing your car loan. There are many places to find a bad credit auto refinancing loan, but some are much better than others, such as credit unions.

There are a couple problems inherent in trying to find loans when you have a bad credit history. One thing is your natural fear that a bad credit record will prevent you from getting any loans. Another is the reality that lenders will gouge people with bad credit histories because they can. With little regulation in parts of the lending industry, some companies charge high interest rates like 24% on auto refinancing loans.

In almost every case, a bad credit loan will cost more. The reason for that is very simple: people with bad credit records are most likely to continue their bad habits. They present a higher risk to lenders that they will not pay back the borrowed money. Many people who have bad credit reports got those negative entries due to illness, job loss, lawsuits, disability or divorce. They are not bad people; they are credit challenged, have trouble managing their income or they have an inadequate income.

There are lenders who offer a bad credit auto loan refinance. With automobiles, there is a tangible asset involved. If the car is worth more than the loan sought, the car has equity to cover the loan amount and it is used as collateral. If the borrower defaults, the lender may seize and sell the car to pay off the loan.

There are plenty of places to look to refinance an auto loan with bad credit records. Finding the right lender with the lowest interest rates and no fees is the challenge to meet. Browse all over the Internet and see what is available, but do not email for any quotes or your credit record will receive another hit that could worsen it. Many websites offer rate information, but to get it you are actually starting an application. Just keep looking.

Check at websites that offer reliable financial information, such as Bankrate.com. Financial guru Suze Orman always recommends this website to people for rate information. Right now their chart for current rates shows that nationally, average loan interest rates for used cars are 5.42% for a 36 month loan, 6.17% for a 48 month loan, and 6.67% for a 60 month loan.

Persons with bad credit records would be wise to begin their search for a regular loan to refinance their current high interest bad credit auto loan at a credit union. Membership is required, but their rates are low and usually are published on their website. If the car has enough collateral, the loan is actually an equity loan and no credit check may be needed at all. If you talk with the lender in person, you have a better chance of getting the loan because you can provide all the information they need to know.