How to Refinance My Auto Loan When I Am Behind on Payments? 3 Steps
When you first signed your auto loan contract
, you likely had every intention of making all of the payments - and on time - until the loan was paid off and the title was in your hands for good. However, then some time went by and "life" happened. Maybe you lost your job. Maybe an unplanned child was born into your family. Or, it could be that things just got more expensive but you haven't gotten any salary raises lately.In any event, at some point making auto loan payments month in and month out became more and more difficult. Now, you find yourself behind a few months on payments and you fear your car could get repossessed. What should you do?
You may be considering refinancing your car as a way to lower your payments and keep your car. With refinancing, you can potentially extend the length of your loan - thereby reducing monthly payments and making them more affordable. But, can you refinance your auto when you are behind on your payments?
If you are wondering, "How to refinance my auto loan when I am behind on payments?," here are 3 steps to making it happen:
1. You need to get paid up with your existing loan first:
Technically, in order to refinance your auto loan, you will need to get caught upon your payments. This means you are in what is known as a Catch-22 situation: you are stuck between a rock and a hard place.
However, these days, given the economy, many lenders are becoming more flexible. You should start by going to your existing lender and asking them if you can qualify for a new loan at a lower interest rate or longer repayment terms. You will also need to get special permission to have them extend you a refinance loan even though you are behind on payments.
2. Or, look for a list of bad credit auto refinance lenders:
If the negotiations with your current lender do not bear fruit, it is probably because your credit score has suffered during the past few months as you got behind on payments. No worries: your next step should be to seek out a list of bad credit auto refinance lenders. These lenders specialize in working with bad credit individuals.
3. Apply to each of the lenders:
Apply to each lender for a refinance loan. Make sure that you apply for an amount that covers the total outstanding principal - plus all accrued interest - on your current loan. It is essential that you apply to at least 5 lenders in order to have a better chance of securing an excellent low rate for yourself.
Take these 3 steps to refinance your auto loan when you are behind on payments.
How to Refinance My Auto Loan When I Am Behind on Payments? 3 Steps
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