It may be hard to believe, but those who are currently paying off a bad credit car loan have some refinancing options that may give them a slightly better interest rate.
Bad credit car loan refinancing better available to people who have proven themselves as:
- Responsible borrowers who have consistently paid on time and in full
- Decreased or eliminated other bad debts
- People who have increased their income.
If this sounds like you, there may be a way for you to refinance your car loan, even if you have a bad credit car loan at a sub-prime interest rate.
People who’ve had bad credit but made significant efforts to improve that credit are known to financiers as people with “correctible credit.” “Correctible credit” holders have repaid loans on time and in full, increased their income or paid off other debts from when they first took out the loan.
If you've achieved these important credit goals, it means you're a lower risk than you were previously. This gives you more power to bargain with when it comes to finding the best car finance deal.
Trading-in, paying off and moving up
If you are now in the "correctible credit" category and still have a bad credit car loan, one option to refinance your vehicle is trading in your financed vehicle, paying off the bad credit car loan in full. "Correctible credit" holders can opt to upgrade or change your current vehicle. You'll get a new loan, and most likely a better interest rate. This is due to lowering your risk and proving you’re a responsible borrower.
If you're not quite there
If you haven't paid enough debt off to join the "correctible credit" category you may have good enough credit to take out an unsecured personal loan which pays off the bad credit car loan in full.
Though these loans may come with high interest rates, but they are usually better than the sub-prime interest rates of 30% per annum or more. It's also likely those without "correctible credit" may be refused such a loan due to being a high risk without any security attached to it, i.e., a car as collateral.
If you're unsure if you are able to refinance a bad credit car loan, the bad credit refinancing experts at Savvy empower you to make the right choice when it comes to bad credit car loan refinancing.
Our team has years of experience in bad credit car loan products and options such as refinancing. Not only that, we are connected to some of the best and fairest lenders in Australia. Contact us here for a quick assessment or give us a call.