Refinancing a high mileage car is a good way to save money and reduce your monthly auto loan payments. Some people are not aware of bad credit car refinance loans, until they have driven their cars and trucks for 3 years or longer, clocking a lot of mileage in the process. Knowing how to refinance older cars with high mileage can help you take advantage of the recent low interest rates.
Most people take $50,000 car loans up to 60 months. This lead to a lot of interest fees paid to the banks and lenders. Thus it is to your benefit to pay attention to lower APR deals. However, a common problem is finding lenders who are willing to refinance a high mileage car. If you have tried, you will realize that many banks are not refinancing car loans on older vehicles above 3 years of usage.
However, there are too many confusion about high mileage auto refinancing. While you may save money on the reduced APR on the remaining loan, there are various closing costs and fees that may negate the APR savings. That is why you need to be careful and find where is the best place to get a high mileage car refinance loan for bad credit or above 100% loan-to-value. Meanwhile, avoid further jeopardizing your weak credit score with yet another weekend payday loan for a getaway with your hot date.
A major impediment to car loan refinancing is the early payment penalty. Check whether your existing lender levy such a fee or whether your new lender is willing to pay for it. Sometimes, it may end up not worth the efforts to refinance an auto loan after adding all the closing costs.
It is highly recommended to get your free annual credit report at annualcreditreport.com and generate your latest FICO score (about $10) online. Your chances are higher with an older high mileage vehicle if your FICO credit is above 720. For those with poor credit, there are other options to refinance high mileage cars and trucks besides trying to rebuild FICO scores fast.
Verify the fair market value of your car using the Kelley Blue Book. You want to ensure that your current car loan is not underwater or upside down – meaning that you owe the banks more money than what the car is worth, it will be easier to find lenders willing to refinance high mileage trucks and cars.
Do not bother wasting your precious time approaching banks to refinance old vehicles since they are only interested to refinance new and low mileage cars. Furthermore, you need good credit to get a car loan refinance at banks. Refinancing a high mileage truck equates increased default risk and illiquid, borrowers with bad credit, upside down auto loans etc, these are all situations not acceptable at banks. Your best chances is to approach reputable and legitimate auto refinance lenders online such as Capital One Auto, CitiFinancial etc.
It is a good idea to shop and compare loan quotes from more than 2 refinance companies for high risk car refinancing on high mileage cars or trucks. Usually, online lenders can offer better rates for auto refinance deals and you can save as much as 5% APR, which is at least several hundred dollars on a $50,000 car refinancing loan.
For car owners with high mileage vehicles, you can also consider an unsecured personal loan to pay off the remaining auto loan instead. You are simply replacing the car loan with a new loan with no collateral. You do need to have tremendously improved FICO score to get cheaper rates in return since no collateral is used. For homeowners, you can try a home equity loan which will definitely come with cheaper rates compared to a car loan refinance.
For the self employed, you need to provide tax papers and additional references to prove a minimum monthly income. Even if you have been late on your car loan payments, you can still get accepted by some lenders to refinance your auto loan on high mileage vehicle.