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Requirements for Refinancing on Bad Credit Auto Loans

Almost all finance brokers and loan consultants advise their clients that it is always best to think of future refinancing when choosing bad credit auto loans. This is because the bad credit auto loans come at a price and that price couldn’t be afforded for the entire loan term. Refinancing ensures that the monthly installment on the new loan remains low and affordable.

However, there are some things which are necessary to become an applicant for refinance of bad credit auto loans. These requirements are mentioned in the following lines:

The first requirement is that the auto loan should be seasoned which means that the borrower should have had made the payments for at least a year. This is important for both the lender and the borrower. This ensures that a major chunk of the financed amount has already been paid which reduces the new finance amount (thus also reducing the risk involved for the lender).

Another requirement is that all the payments should have had been made at time. A lender cannot trust an applicant who hasn’t made his/her prior payments on time.

The third requirement is that the value of the car should exceed the amount that the borrower owes. This means that the borrower could not afford to be in an upside down loan when applying for refinancing.

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