There are two scenarios for bad credit auto loan refinancing:
The first scenario is for people who have a loan at a higher interest rate because of bad credit, have paid well on the loan, and now want to lower their car payment. This is a great reason to consider a bad credit auto loan refinance.
A consumer financed $10,000 for 36 months at 21.95% interest and has made 8 payments of $381.65. There are 28 payments remaining and the balance
The consumer refinances the auto loan for 25 months at 12.95% interest. The payments are lowered to $380.78 and the loan is paid of three months
In this example the total of payments has been reduced from $13,716.00 to $12,572.70. A decrease of $1,143.30
The second scenario is for people that have a conventional loan and have experienced bad credit since the inception of the loan. If this is the case,
chances are that you are not a good candidate to refinance your auto loan. It is unlikely that the new rate would be lower than your current rate.
About the only reason this would make sense is if you had only a short term left to pay on the loan and wanted to extend the term out to lower the
payment. Perhaps your income has lowered since you purchased your car. If this is the case make sure you examine the length of the refinance loan,
not just the monthly payment.
A consumer financed $10,000 for 36 months at 7.5% interest and has made 18 payments of $311.06. There are 18 payments remaining and the balance
The consumer refinances the loan for 36 months at 16% interest. The payments are lowered to $185.63, a monthly savings of $125.43.
In this example the total of the payments, however, has increased substantially. Without refinancing, the total of payments would have been
$11,198.16. After refinancing the total of the payments is $12,281.76. A increase of $1,086.30. This scenario is only recommended for people
in financial distress and that absolutely have to have a smaller car payment.