How to Refinance a Car Loan With Negative Equity

There are a few steps to doing this, sometimes it can be hard to get this done and sometimes easy to get this done, if your trying to refinance a car that has negative equity, and your credit is good this should be no problem for you, if your credit is bad this will be quite difficult.


Instructions
Things You'll Need:

* Credit
* know how long you want to pay on the car
* know how old the car is
* have a bank, or credit union in mind
* have a car dealership in mind

Step 1

The first step in this process is going to a site that lists values of your car such as kelly blue book. You need to know how much negative equity you have in your car before you actually start the process, banks and credit unions alike will look at this as a factor or refinance.

Step 2

After determining what your car is worth you have to determine how long you are willing to pay on the car the longer you refinance for the larger your interest rate will usually be not much but even .5% makes a big difference in a car payment and the amount of interest that you will pay. you usually can refinance anywhere from 24-72 months depending on the age of your car and what's left to pay.


Step 3

Contact your bank, or Credit union and let them know what you would like to do for a refinance on your car sometimes they will work with you others they won't really work with you. Most of the time if you have a good credit score they will be more then happy to work with you.

Step 4

After you have refinanced your vehicle your set, there shouldn't be much more that you would have to do on your part, though if a bank does not want to refinance and you don't owe to much negative equity on your car you might want to go to a dealership.

Step 5

If you don't have to much negative equity on your car you can trade it in for a newer car, the dealership will buy the car from your bank, and more often then not give you a newer car, this could either increase or decrease your payment depending on how new of a car you were to get, and how expensive of a car you bought. This should be a last resort seeing that dealerships give you substantially less then what your car is worth and you will have more negative equity on your new car.


Tips & Warnings

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Know what your credit score is
*
Try and use a credit union they usually offer lower interest rates, but sometimes are harder to get qualified for a loan through
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Try to get a lower amount of months if you can afford the refinance this will save you money in the long run
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Don't refinance more then you currently can afford to pay the car off faster
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Don't refinance for an interest rate more then 1pt higher then your current rate
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Do a little bit of shopping don't choose the first bank that you ask, most people bank with 2-3 different institutions.