Car Loan Refinancing for Bad Credit

Generally it’s recommended to wait at least 6 months before refinancing an auto loan. This gives your credit time to recover from the hit it probably took obtaining the first loan. If you have bad credit, you may want to wait even longer than this as you make on time payments. On time payments can boost your credit score which can help you prepare to qualify for the refinance. 

Getting prequalified gives you the chance to receive a loan offer, usually with no credit impact. While you will still need to undergo the underwriting process to obtain the loan, getting prequalified is usually where you will start. When you apply for an auto loan, you will submit details to the lender or through a platform that will connect you to lenders. From there the lender can either generate a prequalified offer, counter offer, or simply deny the request. Keep in mind the lender can ask for supporting documentation so ensuring the information you submit is accurate can help the process go smoother. 

Some lenders may work with borrowers that have a 500 credit score. However, you may want to assess your credit score to identify ways to boost it before applying for an auto loan. Refinancing with a cosigner with good credit may also be an option. If you have plenty of equity in your vehicle, this can help you qualify as well. 

Credit score requirements can vary depending on the lender, as well as the equity you have in your vehicle. Other factors such as income can also weigh on the decision of the lender. For a personal loan from one of our lending partners, offers will be more likely to be returned for borrowers with fair, good, average, or excellent credit. Most lenders on the Acorn Finance platform have a credit score cutoff of 600 or above. For a secured auto loan, credit score requirements may be lower since the automobile is used as collateral. 

Refinancing your car should be a positive influence on your credit score. In most cases, when you refinance an auto loan, the previous loan shows as paid in full. While you are still taking on new debt, and maybe more debt, a positive remark on your credit score should be a good thing. Just be sure to borrow responsibly moving forward. 

Acorn Finance offers a platform for consumers to check personal loan offers through. Within 60 seconds or less you can receive prequalified offers from top national lenders. If you owe a small amount on your car, a personal loan might make sense to use for refinancing. To consider the option of using a personal loan to refinance your vehicle, check offers at Acorn Finance with no credit impact. 

When you have bad credit, you must find ways to improve your score. With a little dedication and attention, refinancing an auto loan can help you do just that, while saving money.