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Can I refinance my car loan with bad credit? Part Of Refinancing a Car Loan In this series Refinancing a Car Loan Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by offering you interactive financial calculators and tools, publishing original and objective content, by enabling you to conduct research and analyze information for free to help you make financial decisions with confidence. Bankrate has partnerships with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that appear on this site come from companies that pay us. This compensation may impact how and when products appear on this site, including for instance, the order in which they be listed within the categories of listing, except where prohibited by law. Our mortgage home equity, mortgage and other home lending products. But this compensation does not influence the content we publish or the reviews that you see on this site. We do not cover the vast array of companies or financial offerings that might be open to you. PeopleImages/Getty Images

4 min read Read Published January 13, 2023

Written by Allison Martin Allison Martin Written by Allison Martin's work began over 10 years ago as a digital media strategist, and she's since been featured in a variety of top financial publications, including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com. Editor: Rhys Subitch Editor: Auto loans Editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain the confidence to manage their finances with concise, well-researched and reliable information that breaks down complicated topics into manageable bites. The Bankrate guarantee

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At Bankrate we are committed to helping you make better financial decisions. We adhere to the highest standards of editorial integrity ,

this post may contain some references to products offered by our partners. Here's how we earn money . The Bankrate promise

In 1976, Bankrate was founded. Bankrate has a proven track experience of helping customers make informed financial decisions.

We've earned this name for more than four decades through demystifying the financial decision-making

process, and giving people confidence in the decisions they will do next. Bankrate follows a strict ,

So you can be sure that we'll put your interests first. All of our content is authored with and edited

They ensure that what we write is objective, accurate and reliable. We have loans journalists and editors are focused on the areas that consumers are concerned about the most -- the different kinds of loans available and the most competitive rates, the most reliable lenders, the best ways to pay off debt , and many more. So you can feel confident when investing your money. Editorial integrity

Bankrate has a strict policy , so you can trust that we put your interests first. Our award-winning editors and reporters produce honest and reliable information to assist you in making the right financial choices. Our main principles are that we respect your confidence. Our mission is to provide readers with accurate and unbiased information. We have editorial standards in place to ensure that happens. Our reporters and editors thoroughly verify the truthfulness of content in order to make sure that what you read is accurate. We maintain a firewall with our advertising partners and the editorial team. Our editorial team doesn't receive compensation directly from our advertisers. Editorial Independence Bankrate's team of editors writes for YOU - the reader. Our aim is to provide you the best information to assist you in making smart personal finance decisions. We adhere to strict guidelines in order in order to make sure that the content we publish is not in any way influenced by advertising. Our editorial staff receives no any compensation directly from advertisers and our content is thoroughly fact-checked to ensure accuracy. So, whether you're reading an article or a report you can be sure that you're getting reliable and reliable information. What we do to earn money

You have money questions. Bankrate has answers. Our experts have helped you understand your money for over four years. We are constantly striving to provide our readers with the professional guidance and tools required to make it through life's financial journey. Bankrate follows a strict policy, which means you can be confident that our information is trustworthy and accurate. Our award-winning editors, reporters and editors produce honest and reliable content that will help you make the best financial decisions. The content created by our editorial team is factual, objective, and not influenced through our sponsors. We're open about how we are in a position to provide quality content, competitive rates and useful tools for you , by describing how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the promotion of sponsored goods and services or when you click on specific links that are posted on our website. So, this compensation can influence the manner, place and in what order items appear within listing categories in the event that they are not permitted by law for our mortgage, home equity and other home lending products. Other factors, like our own website rules and whether or not a product is available in your region or within your self-selected credit score range could also affect how and where products appear on this site. Although we try to offer the most diverse selection of products, Bankrate does not include specific information on each credit or financial products or services. Are your car loan payments stretching your budget thin? You may have considered refinancing your loan to reduce your payments or possibly get a better interest rate. If your credit score is low the refinancing might not be feasible or even save you money. Instead, consider alternatives first. Do I have the option of refinancing a car loan even if I have bad credit?

If you do refinance a car loan even with bad credit it can put you in a difficult financial situation, so it's best to think about alternatives such as requesting loan modification or trading in your car.

There are many reasons to not refinance an auto loan using bad credit Lenders start a new loan term once you . In the real world, you might get a more affordable monthly installment. However, there's one caveat that if the credit scores have improved after you took out the initial loan but you're not likely to be able to get a better rate of interest. In addition, you may pay more over the life of the loan due to the fact that the lender has more time to get the interest. If you're looking to reduce the amount of your monthly payments it is possible to do this. In other cases, prolonging the loan term without scoring an interest rate that is lower could mean paying far more than the vehicle is worth. It's also important to know if your current lender is penalized for prepayment. If it does, the disadvantages of refinancing your vehicle loan might outweigh the benefits of a lower monthly payment. Refinancing the car loan with bad credit If you already have a credit score that has decreased since you purchased your vehicle or you are in need of a lower payment, refinancing could be worthwhile. Similar to shopping for an used or new car refinancing requires a lot of investigation. Make sure you review your credit report and score to avoid any unpleasant surprises before searching for an additional loan. If you find any incorrect or out-of-date information, file disputes promptly to the bureaus that handle credit-- Experian, TransUnion or Equifax reporting the wrong information. You can request a copy your credit report free of charge by contacting . Explore your options consult with your current lender about refinancing options that may be open to you. Look into credit unions and banks that you have a relationship with. Also, like Caribou, RefiJet and Ally that are geared towards those with less-than-perfect credit might be a good option. Based on the lender you choose, you might be able to check the rate of your loan without impacting your credit score. Bankrate Tip

When shopping pay close attention to your options for repayment and the requirements for approval specifically in relation to your car's age and mileage.

Request a new loan Prior to submitting an loan application, gather any documents that the lender will need to expedite the review process. Most will request documents proving your the income, residency and details regarding your current loan. It is also necessary to supply the amount of miles, make, model and the vehicle identification number for your vehicle. If you are applying, be sure to ensure that you fill out the form correctly to avoid discrepancies that can cause rejection or rejection of the application. The lender will confirm the information you supply. Finalize the loan Review the loan documents to ensure that the conditions and terms are acceptable to you. If so, sign on the dotted line in order to close the loan. The money will be sent straight to the current lender or to you to allow you to pay the initial loan off. Bankrate Tip

Make sure to contact your lender to see the date you will begin making payments. From there, you'll follow the new monthly payment schedule until you pay off your refinance loan.

How to improve your credit prior to refinancing it is in it's best interest for you to increase your credit score prior refinancing your vehicle loan. The most competitive interest rates are usually offered to borrowers with excellent or excellent credit, and an improved credit score can be the difference between obtaining a . Here are some practical ways to : Pay all your bills on time. Be current on past due debts. Reduce the amount of your credit card balance to 30 percent or less than your credit limit. Do not close credit accounts that you have closed. Only apply for new credit as required. Also, you should monitor your credit score to keep track of your progress. Certain credit cards or lenders offer free credit reports with your monthly statements. Otherwise, you may need to rely on checking frequently or making payments to see your score. Alternatives to the car loan refinancing There are other options available in the event that you analyze the data and determine that refinancing your car loan isn't a smart choice for you financially. Sell it. Based on the value of your vehicle is worth and how much is owed on the current loan and the amount of your loan, you may be able to trade it in for a more affordable option and possibly take the remaining balance and roll it into an entirely new loan. Request a modification. Since most lenders don't change their loans You can apply for this type of . This permits you to alter the payment terms and, sometimes, interest rateswithout going through a new application process. Defer payments. This option is only available when you're experiencing financial hardship in the short term However, it's an alternative. You may be able to skip up to three months of installments. However, they'll be tacked onto the last month the loan and you'll be accruing interest. Change your budget. If you're struggling , consider adjusting your budget to make your payments more affordable until you qualify to refinance. You should also improve your credit score in the meantime in order to secure an interest rate that is better when you apply for the next loan. The bottom line Unless you're facing financial difficulties and risk having problems if you don't reduce the cost of the loan, refinancing a mortgage on bad credit may not be a healthy financial decision. Instead, explore alternatives, like adjusting your spending plan temporarily until you get your finances and credit health back to normal. It's also possible to exchange your vehicle to a cheaper car depending on the value it's worth.

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Allison Martin's writing began more than 10 years ago when she was an expert in digital content, and she's since been published in a variety of top financial publications such as The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are dedicated to helping readers gain the confidence to take control of their finances with clear, well-researched facts that break down complex subjects into bite-sized pieces.

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How to get an auto loan in 5 steps Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by providing you with interactive financial calculators and tools, publishing original and objective content. We also allow users to conduct research and compare data for free - so that you can make sound financial decisions. Bankrate has partnerships with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are advertised on this website are provided by companies who pay us. This compensation can affect the way and where products appear on the site, such as the sequence in which they be listed within the categories of listing, except where prohibited by law. Our mortgage, home equity, and other home lending products. This compensation, however, does affect the information we provide, or the reviews that appear on this website. We do not contain the vast array of companies or financial offers that may be accessible to you.

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We've maintained our reputation for more than four decades through making financial decisions easy to understand

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so you can trust that we're putting your interests first. Our content is written in the hands of and edited by

who ensure everything we publish ensures that everything we publish is accurate, objective and reliable. Our loans reporter and editor focus on the things that consumers care about most -- the various types of loans available, the best rates, the most reliable lenders, ways to repay debt, and more -- so you can feel confident when making your investment.

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Bankrate follows a strict , so you can trust that we'll put your needs first. Our award-winning editors and reporters create honest and accurate content that will help you make the right financial choices. Key Principles We appreciate your trust. Our aim is to offer readers accurate and unbiased information, and we have established editorial standards to ensure that occurs. Our reporters and editors rigorously check the accuracy of editorial content to ensure the information you're reading is true. We maintain a firewall with our advertising partners and the editorial team. The editorial team of Editorial Independence Bankrate does not receive compensation directly through our sponsors. Editorial Independence Bankrate's team of editors writes for YOU - the reader. Our aim is to provide you the best advice to aid you in making informed personal financial decisions. We follow strict guidelines in order to make sure that the content we publish isn't in any way influenced by advertising. Our editorial staff receives no any compensation directly from advertisers and all of our content is checked for accuracy to ensure its truthfulness. So, whether you're reading an article or a review, you can trust that you're getting credible and dependable information.

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If you're looking for a , the process can be intimidating. However, if you're equipped with the right information and know the different aspects involved, you'll simplify the process and make it more manageable. 1. Find out your car loan budget. The issue of is not a simple one, particularly considering that buying a car can be a significant investment. The most effective answer to this problem is determined by your budget and the ability to repay the loan. Consider these three main steps. Find out your current and forecasted financial picture. Examine your earnings and how likely it is you will continue the same job. If you're planning to make a significant change coming up, take into account the change. Consider the full cost of ownership. The , fuel costs and other costs you encounter must be taken into consideration. Evaluate other costs. In order to make a sound financial decision, it is important to keep an eye on your budget and know what the costs that are outside of your car are, like other debt repayments. 2. Check your credit report The first step in getting granted an auto loan is to check your credit report for any errors. Errors such as duplicate accounts, incomplete payment history , or incorrectly spelling names could all affect your credit score, causing you to be denied. Verify your credit score credit score is usually obtained for free from your bank. This is generally your FICO credit score, which is updated on a monthly basis. Every credit score may not be according to the FICO scale however. You will need to be aware of the score type you're given. Review your credit report Your credit report is more in depth more than the credit score. It lists each account you've held over the last seven years, as well as your the history of your payments, how much you owe as well as if you've been sued or declared bankrupt. Credit reports come from the three credit bureaus that are the largest: Equifax, Experian and TransUnion. While you can typically only pull these reports directly from the credit bureaus once per year for free, you can currently pull them on a weekly basis for free using AnnualCreditReport.com. Make sure you are aware of any mistakes, like accounts that are reported as being paid off, but they're not, or payments that are reported incorrectly can all impact the credit rating. Check your report to ensure you're in the right place. Make sure that any changes are requested 30 days or more prior to applying. It may take up to 30 days to act on your request. Don't open any new accounts. opening a new credit card can temporarily affect your credit score. It is better to wait from opening new accounts until after you have your auto loan and, if it's possible. Be careful with your use of credit cards. A high balance on your credit cards can significantly affect the credit rating of your. If you can help it do not add to any revolving credit balances and stick with cash payments. 3. Get an auto loan preapproval. You can get preapproved prior to visiting the dealership. There is a good possibility that you'll be offered a higher price than your preapproved one when you visit the finance department at the dealership. The reason is that dealerships add a commission to any rates offered by the lenders they work with. It is also a good way to know the exact amount you will be in a position to borrow. You can also think of it as if you bought with cash once you get to the dealership. It's suggested to apply for preapproval with minimum three different lenders in order to make sure you get the most value for money. 4. Find a car second step involves actually . Search for cars that fit your needs , then go to car dealerships to test drive them. Talk with salespeople and compare your options to understand what's out there, just keep your purchasing power close to the chest as it is crucial to negotiations. It's important to do the study prior to stepping onto the dealership's lot, though. With websites like Edmunds and Kelley Blue Book, you can look at different models and how much they'll cost based on make, model, trim and even your location. If you're considering trading into your current vehicle- especially if you want to buy used -- check out online services like and . It's possible to receive lower rates than you could with a dealership. 5. Complete the auto loan Once you've found the perfect auto loan, confirm the terms for the loan. The lender may ask that you provide any necessary documents , including , before you settle on the terms and then sign the documents. Sign the auto loan documents. If you are in agreement with the terms, then sign the documents. When you apply with a friend co-signer, that person should also sign the auto loan documents. If you've received an auto loan from a dealer, the dealer will send you your auto loan contract with the contact details for the lender. Take the vehicle's title and registration. You'll need to get your vehicle's title delivered to the lender and also have the registration of your vehicle updated to your name, the dealer will typically take the necessary steps if you're purchasing from one. If not, work with the seller and DMV to update the necessary documents. You'll also need the proof of insurance. You can take possession of the car. Once you have received the auto loan and complete the sale, you can be able to take possession of the car. The final word: If you're in the market for a new car the process of financing could be daunting and you should be prepared with information. And if you're not sure how much you can afford, check your credit score prior to making a decision to visit the dealership. Learn more

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Mark Kantrowitz is an expert on student financial aid, including the FAFSA, 529 plans, scholarships educational tax benefits, student loans.

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Do you have to pay sales tax when you lease a buyout? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by offering financial calculators and interactive tools that provide objective and unique content, by enabling you to conduct research and analyze data for no cost - so that you can make financial decisions with confidence. Bankrate has agreements with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The products that are featured on this website are provided by companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they appear in the listing categories in the event that they are not permitted by law for our mortgage, home equity and other home loan products. However, this compensation will affect the content we publish or the reviews you see on this site. We do not contain the vast array of companies or financial deals that could be open to you.

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4 min read Read Published on January 24, 2023.

The book was written by Dan Miller Written by Points and Miles Expert Contributor

Dan Miller is a former contributor to Bankrate. Dan covered loans as well as home equity and debt management in his work.

Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since the end of 2021. They are dedicated to helping their readers feel confident to manage their finances by providing precise, well-researched and reliable information that breaks down otherwise complex subjects into digestible pieces.

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More information

At Bankrate we are committed to helping you make better financial choices. We adhere to the highest standards of journalistic integrity ,

This article may include references to products from our partners. Here's a brief explanation of how we earn our money .

The promise of the Bankrate promise

Established in 1976, Bankrate has a proven track record of helping people make informed financial decisions.

We've earned this name for over 40 years by demystifying the financial decision-making

process and gives customers confidence in which actions to take next. process and gives people confidence in the next step.

so you can trust you can trust us to put your needs first. All of our content is authored in the hands of and edited by

who ensure everything we publish ensures that everything we publish is accurate, objective and trustworthy. The loans reporter and editor are focused on the areas that consumers are concerned about most -- the various types of loans available as well as the best rates, the most reliable lenders, how to repay debt, and much more. So you'll be able to feel secure when making your investment.

Editorial integrity

Bankrate follows a strict and rigorous policy, so you can rest assured that we put your interests first. Our award-winning editors, reporters and editors produce honest and reliable content to assist you in making the right financial choices. Our main principles are that we appreciate your trust. Our mission is to provide readers with reliable and honest information. We have editorial standards in place to ensure that happens. Our reporters and editors thoroughly fact-check editorial content to ensure that the information you're reading is accurate. We keep a barrier between advertisers as well as our editorial staff. The editorial team of Editorial Independence Bankrate does not receive compensation directly from our advertisers. Editorial Independence Bankrate's team of editors writes for YOU - the reader. Our goal is to give you the best advice to aid you in making informed financial decisions for your personal finances. We adhere to strict guidelines for ensuring that editorial content is not in any way influenced by advertising. Our editorial team is not paid any compensation directly from advertisers and our content is checked for accuracy to ensure its truthfulness. So, whether you're reading an article or a review, you can be sure that you're receiving reliable and reliable information.

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If you have questions about money. Bankrate has answers. Our experts have helped you understand your money for over four decades. We are constantly striving to provide our readers with the professional guidance and tools required to make it through life's financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our content is honest and reliable. Our award-winning editors, reporters and editors create honest and accurate information to assist you in making the best financial decisions. Our content produced by our editorial team is objective, factual and is not influenced by our advertisers. We're transparent regarding how we're able to bring quality content, competitive rates, and helpful tools for our customers by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the promotion of sponsored goods and, services, or by you clicking on specific links on our site. This compensation could impact how, where and in what order items appear in listing categories, except where prohibited by law for our mortgage home equity, mortgage and other products for home loans. Other factors, such as our own rules for our website and whether the product is available within your area or at your own personal credit score may also influence the way and place products are listed on this website. We strive to offer a wide range offers, Bankrate does not include specific information on every credit or financial product or service.

Sales tax is a part of purchasing and leasing vehicles in states that charge taxes on it. Similar to any purchase, the rules on when and how much you'll pay when you lease the car differ by state. If you decide to purchase the leased car at the end of the lease, you could also be required for sales tax to be paid as part in the acquisition. Are you required to pay sales tax when you lease a buyout?

The likelihood of paying sales tax on a lease purchase is contingent on the state where the purchase was made and the lease's terms. It's possible the state you live in included the tax in your .

A lease buyout is what it sounds like? A lease buyout, which typically occurs at the expiration of your lease, is when you opt to keep your car rather than return it to the dealer. When you purchase your lease, you'll pay the remaining value of the car , which is the remaining value at lease's expiration -- in addition to any taxes or fees applicable. Certain leases do not allow the purchase of a lease, which is why you have to buy out of the lease you're on. What is the sales tax applicable to my lease purchase? Depending on your lease and state, you may already have paid all the tax required for sales. At the very least, you have likely already paid a portion of the sales tax for the car, so it's very unlikely that you'll need to pay taxes on the complete original price of the car you leased. The majority of states incorporate the tax on sales into the monthly payment of the car lease, though a few states require that all sales tax on all of your payments be paid in advance. In a couple of states, such as Texas the lessees are required to pay sales tax on the full value of the leased car versus just the tax on the payments made during the lease. How do I determine the sales tax due on the purchase of my lease? Before you calculate the sales tax on the lease purchase you'll need to know the car's residual value. The amount you pay for your lease is dependent on the difference between the car's original value and its residual. The best method of calculating the sales tax on your lease buyout is to look at the original lease documentation and find a breakdown of the taxes. Contact your State's Department of Motor Vehicles or visit its website to learn the method of calculating sales tax for leased vehicles in the state you reside in. Then, you will be aware of the taxes when you purchase out your lease. If you'd like to have a more definite idea of what you may be paying for tax, you might want to consult a tax professional. When should I consider a lease buyout? There are several things to consider when determining whether it makes sense to make a purchase on lease. The first is to determine if the car can be valued at least as much than the amount you're paying for. If not, it's likely to be a sign that leasing buyouts aren't an option worth considering. Another thing to think about is the time at which the lease expires of the lease. If you go over your mileage allowance or your vehicle is showing an excessive amount of wear, then you could be charged additional charges if you turn your car into. Based on the price the charges will be, it may make sense to do the lease buyout. The bottom line Deciding whether to buy your leased car hinges on several factors. Knowing whether you have to pay sales tax -- and in what amount to pay when you purchase your leased car will allow you to determine if it makes sense for you. Laws vary by state, so check your lease paperwork and your State's Department of Motor Vehicles for the sales tax regulations in the area you reside. Also, remember that you have the option of reselling a leased car or do an option to buy out the car you leased at any franchised dealership that is carrying your brand. If you're uncomfortable working with the dealership you originally leased the car through, simply take your business to another dealership. Frequently asked questions Can you finance a lease buyout? Yes. If you're thinking of buying out your lease but need an loan to fund it, you may request a lease purchase loan, offered by a range of different lenders.

Do you need to make an upfront payment when you buy out your lease? While making a down payment to purchase your lease is not required however it can reduce the amount of your monthly payments and help you save money in the long term.

What are the rates for lease buyouts? Like auto loan rates, lease buyout rates vary according to lender and are dependent on a variety of variables. Check out current interest rates to gauge the APR you can expect.

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The article was written by Points and Miles' Expert Contributor

Dan Miller is a former contributor to Bankrate. Dan covered loans, home equity and debt management in his writing.

The edit was done by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain confidence to manage their finances with precise, well-researched and reliable information that breaks down complicated topics into bite-sized pieces.

Auto loans editor

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