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How To Refinance A Car Loan With Bad Credit

Poor credit history can make the life difficult when it comes to getting the car loan as creditors will be hesitant in giving the loan thinking it as a bad investment. Finance companies and banks are being strict in doing any business by giving such loans or going out of the market completely. But the times are changing now.

Having a bad credit history is not ruling out your options of getting a loan completely. There are ways in which you can get the re-financing done even if you have damaged the credit score. Basically re-financing works as a process of taking another loan to pay off the financing of the first loan.

Read below to look out for such options available:


By shelling out more fee or high rate

If you have applied for a ‘vehicle loan’ with bad credit that does not automatically discard you as a potential customer for getting the loan. You might end up paying higher interest rates than the prime customers or you might have to pay extra fees.

Don’t consider that you are being taken advantage of or victim of any fraud, this is just to safeguard the interest of the financier to mitigate their risk. Visit www.newcarcanada.ca to understand the terms and conditions for refinancing your car loan with poor credit history.


Winning the trust of the creditors

A good payment track record can help you immensely in refinancing your car loan with bad credit. To break the cycle of the poor credit history, make all the payments timely. If you have some saved money, which you can afford, pay a part-prepayment that will build your credibility and subsequently the chances of a healthy credit score.

Research your options

Spend some time in researching the available options. A lot of finance companies and banks have sophisticated options for refinancing the car loan. There is a common misconception that loan application lowers the credit scores.

In reality, there is a small decline after 30 days of your applying for the loan, which is also a temporary event. This can be easily offset by refinancing your car loan.

There are advantages of refinancing your car loan as well. The potential ones are:

  • Monthly payments get lower: This is done by either increasing the duration or reducing the interest rate of the loan or by doing both. Refinancing might reduce the monthly car payments.
  • Fewer interest rates: If the re-financed loan comes at lower interest rate than the first loan, it reduces the total amount of interest paid by the time loan amount gets done.
  • Changing the loan duration lead lesser total payment:  By reducing the duration of the refinanced loan, you might end up paying increased monthly payments, but it will reduce the total amount paid for the car.

There are finance companies, which are willing to consider consumers with all types of credit scores. Refinancing is one of the options available with such lenders. Don’t get disheartened with your poor credit history. Certainly, there are ways to resolve the situation and re-financing’ is one option worth exploring.

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