OK, you’ve filed bankruptcy. Your credit isn’t great, but you need to buy a car.So you go to the local car dealership and believe the salesman when he says…

"Buy this car today at this high interest rate and we’ll refinance you in 12 months at the lowest interest rate possible."

Recovering from bankruptcy is easier than you thought! Time to celebrate, right?

WRONG!

Don’t Believe Everything a Car Salesman Tells You

Every day car dealers repeat the "refinance in 12 months" lie to bankrupt people to push them to purchase cars at extremely high interest rates. You may have financed a car through a high-interest lender knowing that it’s not the best choice. But you probably thought it was your only option at the time and you justified it by thinking you could refinance to a lower interest rate later.

But, when you try to refinance the car months later, you find out the car dealer lied to you.

Best Way to Refinance a Car After Bankruptcy

The first thing you need to determine is whether you qualify to refinance, or if you’re better off just selling or trading-in your car. So let’s start with how much your car is worth.

The biggest mistake most people make when determining the true value of their car is they base their research on the private party value. You need either the trade-in or dealer retail value.

Here’s how to get the value of your car…

Step #1: Go to Edmunds.com. I think Edmunds is one of the best all around automobile sites on the web.

Step #2: When you get on the front page, click on "What’s your car worth?" It’s written in small type and a little tough to find, but it’ll be somewhere on the main page. Or you can go straight to the Used Car Appraiser.

Step #3: Follow the steps and click on the make, model and year of your car.

Step #4: Fill in the vehicle details and any optional equipment your car has.

You’ll see three different values for your car: Trade-In, Private Party and Dealer Retail. The two values you need to pay attention to are Trade-In and Dealer Retail.

Some lenders base their refinancing on the trade-in value and others on the retail value. Ideally, you want to find a lender that uses the retail value, as it’s always higher.

Now that you know the true value of your car, the next step is to call and get your loan payoff from your lender. Loan payoff is what you still owe on the car.Getting a hold of your lender may be tricky. If you’ve defaulted on the loan, your auto lender may cut off all communication with you. So, if you’re having a tough time getting through to your lender, ask for the collections department. They’re your best bet for getting through to a live person.

Ask what the payoff on your car is. If you’re leasing the car, be sure to add the total remaining payments, residual amount and any early termination fees the lender requires so you get the true payoff amount.

Now subtract the value of your car from the payoff amount.

Do you owe less than the car is worth? If so, great…you’ll have more choices and options.

What to do if you owe more than your car is worth

If you owe more on your car than it’s worth (commonly referred to as being "upside down") you need to dig a little deeper.Now that you know what your car is worth and how much you still owe on it, it’s time to start calling lenders.

Credit unions and banks are the best sources for refinancing your car. Car manufacturers rarely refinanceunless it’s for a luxury car. Just make sure the lender you use reports to all three credit reporting agencies. I talk about the importance of reporting to all three agencies in Life After Bankruptcy Issue #12.

The four most important questions to ask lenders when you’re about to refinance your car

The four big questions to ask each lender are:

1. "Do you refinance based on the trade-in or dealer retail value of the car?"
2. "What percentage over retail/trade-in value will you lend?"
3. "Which credit reporting agency do you use?"
4. "What FICO credit score do I need to be approved for refinancing?"

Keep in mind that lenders who refinance usually will lend no more than 125% of the trade-in or retail value. The average amount a lender will refinance is 110%. This means that if you’re upside down on more than 10% of the value of your car, you’re going to have to come up with the difference before the lender gives you the loan.

If you want to figure out how much you’ll need to borrow from a lender to refinance, download the free Auto Refinance Worksheet and I’ll walk you through the calculation process.If you’re not in a position to refinance right now, you have another alternativetrade in your current car for another one with a manufacturer’s rebate.

The Power of Manufacturer Rebates

A lot of new car manufacturers offer huge rebates to move new cars out the door. There’s a big incentive for a dealer to sell a new car.You need to locate the highest rebate offer you can find and work toward trading-in your car to eliminate any upside down situation.

Before you go to a new car dealer, go to www.edmunds.com and look up the rebate and interest rate on every new car and truck a manufacturer offers. This way, if the car salesman isn’t being fair with you (as far as rebates and interest rates are concerned) you’ll know.

Just go to Edmunds.com and click on "New Cars" and then on "Incentives & Rebates" and you’ll get all the information you need.

Some Car Manufacturers Offer Rebates Up to $6,000

It’s not a good situation to be upside down on a high-interest car loan that you need to refinance. However, you can get around it by purchasing a new car with a large rebate. You just use the rebate to offset the amount you owe on your old car.

And if you find a car with a higher rebate (highly recommended), you’re in even better shape. If the rebate is high enough, it can eliminate your negative equity and you can use any remaining amount as partor maybe even allof your down payment.

So, if you’re $6,000 or less upside down, you can still come out smelling like a rose if you play your cards right.

Ask the car salesman this magic question…

In addition, don’t be afraid to ask the car salesman this important question: "What car or truck on your lot do you need to sell immediately?"

If you’re in a negative equity situation (meaning you owe more than the car or truck is worth) you need every advantage you can get your hands on. Ask the auto dealer to sell you the oldest car in their inventory.

Car dealers are willing to take a loss on vehicles they’re having a tough time selling because it costs them more to keep these cars on the lot compared to selling them right away at a slight loss. This could mean another $500 to $3,000 discount for you!

You still need a high enough score to qualify

Just like every other major purchase you make on credit, you need to meet a minimum FICO score requirement in order to qualify for a loan from the lender…especially if the lender is a bank or credit union.

For instance, on new cars one manufacturer requires a FICO score of:

680 and above to get a 125% loan
650 to 679 to get a 115% loan
620 to 649 to get a 110% loan
And a FICO score below 620 gets you only a 100% loan

Any loan over 100% will go toward paying off what you owe on the car you’re trading in.

Bottom line: the higher your FICO credit scores arethe more options you’ll have and better terms you’ll receive. That’s why we’re always preaching to increase your credit scores.

Stephen Snyder is the founder of the After Bankruptcy Foundation a non-profit organization that provides free bankruptcy recovery information. He has helped thousands of people get a car loan after bankruptcy by showing them how to increase their credit score.

By Stephen Snyder Published: 6/30/2007

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A faltering economy makes limping effect on your repayment policies. It is a basic problem a person with bad credit has. He/she takes out loan on extortionate rate to stabilise his/her flaccid financial condition. But incapacity to reimburse the stipulated instalment at the end of each month leads him/her nowhere but refinancing. So does the problem is being faced by an individual with poor credit record. If you are one from such class of people, bad credit car refinance can do a great job for you. With this, you get relief from the burden of astronomical car loan payment and incredibly high interest fees.

Such car refinancing agencies are available in all states over the USA. You can take benefits of the car refinancing to save your money by replacing it with a new finance deal. Lots people wish to change the payment policies on their car loans and wish to make the period of time that the loan is be repaid either longer or shorter.

Initially, the new refinancing company pays the loan and existing balance to the existing finance company. More so, the company sends an invoice to the customer which includes a new, lowered rate of interest. With the help of lower interest rate, the customer can sufficiently pay off the loan for the time period that has been agreed upon. In doing so, the person signs up with a refinance company, the interest that may have occurred with the existing company will not have to be paid. For the reason only, the past interest can be accounted for. Later, the customer does not need to deal with their previous finance company anymore.

Reason behind car refinancing is dip rate of interest. However, still there are chances of improvement. If gravity of your credit is not so deep and you have good employment-ability, you can easily allow you to take benefits of bad credit car refinance. You reduce the burden of your loan payments through refinancing by extending the length of your loan.

Present lender to obtain the balance of your current car loan. It is your job to be sure where to send the payment. Above all, chart out a plan on how long you would like to take to repay the bad credit car refinance.

By: Kevin Clark

Article Directory: http://www.articledashboard.com

Kevin Clark is a financial analyst at Easy Refinance Car Loans. In recent years he has taken up to provide independant financial advice through his informative articles. To find Bad Credit Car Refinance, Refinance car loan, Refinance car loans, USA Refinance car loan, Refinance car loans USA that best suits your need visit www.easyrefinancecarloan.com/

Click here for Refinance Payment Calculator

Tips In Refinancing Your Bad Credit Auto Loan

By Liz RobertsBeing stuck in a car loan with high interest rates and costs can be frustrating. At one point, you may have needed to purchase a car in a hurry but because you have a bad credit history, you may be unable to qualify for …

Car credit is an all encompassing term for the hows and whys of financing the purchase of a new or used car. Its ambit covers loans, payments options, car refinance and leasing. It’s a complex subject so let’s look at a few fundamentals you need to understand before venturing out into these waters.

Do you have the option of going in for a secured loan? Secured loans are offered against collateral such as fixed assets or property and the interest rate is lower than for unsecured loans. However, since unsecured car loans are easy to come by, you may prefer to keep the secured loan option for some other purpose.

Before applying for car credit get a copy of your latest credit report and fix any issues which may have a negative impact on a potential lender.
Car credit covers both buying and leasing. Leasing is cheaper, but what you get is the right to use a car for the lease period after which you give it back to the leasing company. You have not bought a car and it is not your property.

Be careful in filling out your application for car credit. The application will be checked in detail and an honest error may appear, to the finance company, as an attempt to mislead them.
Research all the car credit options available to you but do not make multiple loan applications. These will be reflected in your credit report and may make it seem that you are desperate for a loan which may make potential lenders wary.

Getting a loan through a car dealer is usually quick and easy since the dealer knows the finance companies well and knows how applications are evaluated. He will be able to guide you on how to apply and the pitfalls to avoid.

Be realistic in planning your purchase and monthly installment budget. It is tempting to go in for a great sounding offer that will allow you to buy a car you never thought you could afford. But the bottom line to use for evaluating any car credit offer is how much you will be paying every month and how much is towards the car and how much is interest in the loan.

Prepare a budget you are comfortable with. Do not fall into the trap of availing of higher car credit in the expectation of increased income in the future. Base your planning on what is, not what will be.
At the same time, remember that taking car credit for the maximum time possible may reduce your monthly payments, but the longer duration of the loan will increase the amount you will be paying in interest.

Keep accurate records of everything – your down payment, all extra expenditures like insurance, registrations and so on, your monthly installments etc. In case of any disputes with the finance company, you have all the information you need with you.

By: Brian Sturge

Article Directory: http://www.articledashboard.com

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