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Can I refinance a car loan if I have poor credit?
I have a credit score of only 550, but I want to get out from under the 21% interest rate that's on my car. Am I still a candidate?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Refinancing a car is always a good move if you want to reduce your interest rate—especially considering yours sits at a whopping 21%.
However, a credit score of 550, and likely a considerable amount of negative equity on your
car loan
, means that you probably won’t be able to find a lender to refinance your car loan.Instead, you should focus more on rebuilding your credit and paying your car loan on time. Start by paying off any delinquent accounts and extra debt that has the highest interest rate. Next, make additional principal-only payments on your car loan so you can pay down the negative equity.
Continue to do these things and within a year or two, you should be ready for refinancing to a far better rate.
In the meantime, you can save money in other ways. Set a monthly budget, cut your expenditures, and check to see if you can save on car insurance. Sign up with
Jerry
to compare your current rate to up to 50 other quotes to get the best rate and save the most money.More: How to get a cosigner for a bad credit car loan
View full answer
- Gregory R.
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