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You may be able to refinance a bad car loan and get a lower monthly payment and better interest rate if your credit score has improved since you initially financed your car. Generally, you need a credit score above 640 to qualify for refinancing. If you notice any errors on your credit report, contact the credit bureaus to get them corrected before you apply to refinance your car loan.You want the highest and most accurate score you can possibly have. Set aside time to complete applications with several lenders to refinance your car. You'll need to provide basic personal information to establish your identity and income, as well as information about your car and your current loan. Use free online services, such as Credit Karma or Nerd Wallet, to find lenders more likely to approve your application based on your credit history. Apply to at least 2 or 3 lenders so you can compare rates. Each application you submit will result in a hard inquiry on your credit report. However, multiple inquiries for the same purpose typically won't impact your score significantly. Provided you meet the minimum requirements, you'll likely have 2 or 3 offers to refinance your car. Rather than immediately going with the first offer, take the time to compare so you can find the best offer for you. If you're interested in saving money overall, you generally want to go with the lowest interest rate even if the monthly payments are higher than what you're paying now. However, make sure the additional amount will fit into your budget. If your current monthly payment is too much of a strain on your budget, look for a loan that has the lowest monthly payment. This may entail extending the term of your loan relative to the original, or paying a slightly higher interest rate. Once you've chosen the offer you want, the new lender will have paperwork for you to sign so the new loan will go into effect. The lender will connect with your original lender to pay off your original loan. You may need to contact your original lender to let them know in advance that you are refinancing your loan with a different lender. Find out from the refinancing lender what you'll need to do before you sign the paperwork. Get a copy of the signed loan agreement for your records. Keep it with your sales contract and other car documents so you can easily access it when necessary.
Check your credit score. Apply with lenders to refinance your loan. Compare offers from different lenders. Sign the contract for your new loan.