Do you own a car?

The answer is most likely “Yes,” as there are now three automobiles per household in the United States. If I next asked you if you had an auto loan on your car, truck, or vehicle, the answer would probably also be “Yes,” as the majority of people finance their car purchase, either in part of for the full amount.

In fact, auto loans have grown faster than any other type of consumer debt (save for student loans) over the last five years, with some people paying $400, $600, or even $800 or more per month right when they drive their new car off the lot.

However, those payments are usually still around for many months (and years) after that new car smell fades, as most people take whatever financing options are available to them at the dealership, which usually equates to a less than optimal loan. In fact, many car shoppers get flat-out duped on their auto loans, paying exorbitant interest of even 20% APR, as well as high fees.

The good news is that you can refinance an auto loan, just like you would a mortgage or even do a balance transfer to a new credit card.

If your auto loan payments are taking up a too-significant portion of our budget every month, it may be worth checking to see if you could save a chunk of change by refinancing those loans.

Even if you have bad credit now or your credit score has taken a hit recently, there are plenty of ways you can repair that score and quickly get that money-saving auto refinance.

To be clear, refinancing usually just means getting a new auto loan, most likely with a different bank/lender than you have now, which will replace and pay off your old loan.

So, what are the possible benefits of refinancing your auto loan?

-Lower your interest rate

-Lower your APR (Annual Percentage Rate), which reflects not only interest but fees

-Extend your payment term, possibly saving you money by spreading payments longer

-Benefit from any equity in your automobile (since you’ve been paying down your auto loan already)

-Possibly skip a payment, as a payment is usually not necessary for 30-45 days during the refinance process

The best part is that most people (unless there is an early loan payback condition in their current auto financing contract) are eligible to refinance their original loan auto loan whenever they wish.

However, while lowering your interest rate, extending your loan payback, and saving significant money every month on your car loan payment sounds good, it’s not always easy.

These days, many people are juggling their finances month to month, and so there are missed payments, collections, maxed-out credit cards and possibly even a bankruptcy on their credit reports. When that happens, their FICO score will inevitably sink like a stone.

So, if you have late payments and/or bad credit, can you still refinance your auto loan?

The answer is “Yes,” as well, but it will take a little planning and some help from Blue Water Credit.

First off, remember that we know exactly what factors your credit score is based on.


According to FICO, any consumer’s score is built on:

35% Payment history

30% Amounts owed

30% Credit utilization

15% Length of credit history

10% Credit mix

10% New Credit

Lenders and banks base their decisions to extend a new loan – such as an auto loan refinance – based on the credit score but also what’s on their credit report.

Therefore, by working to repair credit, we can increase a borrower’s score and attempt to clean up the negative items that may keep them from qualifying for a new auto loan.

One of the best ways to do that is by disputing any negative, erroneous, outdated, or duplicated information that’s reporting on each and every one of your reports from the three credit bureaus, Experian, Equifax, and Transunion.

Additionally, there are ways we can boost your score at the same time, such as requesting credit line increases from your existing lenders (which will improve your debt-to-available debt ratio, or credit utilization).

Another tactic is to add favorable and well-seasoned accounts to your credit that weren’t reporting before, such as cell phones, medical debt, utilities, or even rent. Furthermore, if you need a credit pick-me-up, it may make sense to become an authorized user on someone else’s credit line, as it will start reporting as a positive on your report, too.

Of course, it’s important to do these only after you talk to us and/or REALLY understand credit, because making the wrong move at the wrong time with your debt, even if it’s well-intentioned, can actually backfire and LOWER your credit score even more!

If you’re trying to refinance an auto loan with bad credit, you may also have collections on your report. Instead of just ignoring them or paying them off (your score will most likely go down even then!), it’s better to negotiate a pay-for-deletion with those collection agencies, where they promise (in writing) to strike the collection from your credit entirely if you pay it off in full.

When applying for an auto loan refinance, the lender will also look at several factors like the age of the car, its condition, its present Blue Book Value, and even the mileage.

But it’s always best to come and talk to us at Blue Water Credit six months (or more!) before you plan on refinancing your auto loan. We can look at your credit report with you, identifying what needs to be disputed and corrected, as well as offer tips on how to increase your score – all for the sake of qualifying for the best auto loan refinance that saves you a lot of money.

So, drive on over to Blue Water Credit today and let’s get started!