In The Venue

Homeowners aren’t the only borrowers seeking to refinance loans. Low interest rates are making refinancing an attractive option for folks with student and auto loans as well. While bad credit can make it hard for you to secure refinancing on a student or auto loan, there are options for folks with dings on their record to get better terms on their student or auto loans.

Refinancing is basically renegotiating a loan. Borrowers often negotiate with another lender to refinance an existing loan to get a better rate on their debt, reducing their overall debt over time, reducing their monthly payments to create financial breathing space or both. Borrowers seeking to refinance a loan may also want to use existing equity in an asset such as a home to get access to cash.

Right now, refinancing is an attractive option for many because interest rates are at an all-time low. By refinancing your student or auto loan, you can reduce your monthly payments, get a lower interest rate or do both. Refinancing student loans is of particular interest for many, because according to experts, the average college student leaves school with more than $25,000 in student loan debt. For doctors and other professions that require extensive schooling, the averages can be in the six-figure range.

As with any type of loan, a refinancing loan will likely require you to submit to a credit check. If your credit score is less than 620, chances are that you’ll have a hard time finding a bank or lender who will refinance your student loan. However, it is possible to refinance a student or auto loan with bad credit in many cases.

If you’re trying to refinance a loan, and you have bad credit, you may want to take a look at your credit and see if you can improve it. By doing things such as paying your bills on time, refraining from taking out excessive debts and paying off debt, you can improve your credit score and thus improve your chances of refinancing student loan or other debt.

If you have a parent or family member with good credit, you may want to see if they’ll consider co-signing on a refinancing agreement on your student or auto loan. A co-signer’s good credit may improve your creditworthiness in the eyes of lenders.

There are also a variety of services available to help folks with bad credit refinance student or auto loans.

Student loans

Folks with student loans have a variety of options available to help the refinance existing student loans. If you have multiple student loans, you can easily obtain a federal consolidation loan to refinance your debt. Most federal consolidation programs don’t require a credit check, and in the current interest rate environment, it’s highly likely that you can get a lower interest rate on your student loan debt.

Unfortunately, the federal consolidation programs are only available to borrowers who got their loans from a government source. If you borrowed from a private lender, you’ll have to refinance through another private lender. In most cases, these lenders have much more stringent credit requirements for refinancing.

Auto loans

Auto loans can take up a big chunk of your monthly budget, and if you’re having money trouble because of a job loss or work slow down, refinancing your auto loan can give you breathing space and may help keep the repo man from your door.

If you’re seeking to refinance an auto loan, you should owe at least $7,500 on it. Otherwise it’s not worth lenders while to do business with you. You should consider refinancing an auto loan if your current interest rate is more than 5 percent. If your rate is that high, chances are that you can find a lower rate.

There are a variety of lenders who will refinance auto loans for folks with bad credit. Borrowers should be wary however, and make sure that they understand all fees and terms offered by the lender refinancing their loan. Hidden costs and fees can leave the borrower deeper in debt, which is the last thing folks with bad credit need.

Refinancing a student or auto loan can be a big help for folks struggling with large monthly debts. A good refinance will lower your monthly payments, giving you breathing space to address other debts, or get the amount of your monthly income taken up with debt down to a more manageable level. If you’ve got bad credit and are able to refinance your debt, be sure to get your financial house in order, and avoid making the same mistakes that dinged your credit in the first place.