Can I Refinance a Car Loan After an Accident?
If a burdensome car payment is making it hard to pay your bills, then refinancing your car loan may be a great option to infuse some much needed cash into your monthly budget. Car loan refinance can help you secure a lower interest rate, allowing you to lower your monthly payments. This can make it much easier to stay financially afloat each month.
If you’ve been in a car accident, you may be wondering how this will impact your ability to refinance your car loan. The good news is that you can usually refinance your car after an accident, but there are some important considerations that you need to be aware of before moving forward.
Factors to Consider Before Refinancing After a Car Accident
It’s important to assess the current value of your vehicle prior to refinancing your car loan. After an accident, the value of your car might decrease, especially if the vehicle sustained significant damage. Even after repairs are made, this damage may impact your loan-to-value ratio. If the value of your vehicle has dropped below the amount you owe on your car loan, you will be upside down on your car loan, and some lenders may not allow you to refinance in this situation.
In addition, you should assess your credit score and financial stability before deciding whether to refinance after a car accident. The higher your credit score, the more likely you are to qualify for the lowest possible interest rates. If you have bad credit, it can potentially make it difficult to lower your interest rate when you refinance. Your debt-to-income ratio is also a significant factor evaluated by lenders when deciding whether to offer you car loan refinancing. If you currently have large debts, it may be worthwhile to try and pay those down before refinancing.
Finally, it’s important to understand that while some lenders may readily offer auto refinancing after an accident, others may have stricter lending policies. This may limit your options when trying to refinance. Some potential factors lenders may evaluate when determining whether you qualify for auto refinancing after an accident include:
- The severity of the accident
- Your loan-to-value ratio (this impacts your risk of becoming upside down on your car loan)
- Your payment history after the accident
Benefits of Refinancing After a Car Accident
- Lower interest rates – If your credit score has improved since you purchased the vehicle or interest rates have come down, you may be able to significantly lower your interest rate. This can may your monthly payment more affordable and reduce the amount of money you spend over the lifetime of the loan.
- Lower monthly payments – If you’re able to lower your interest rate, it will allow you to lower your monthly payments, making it easier to afford your other expenses. Even if you aren’t able to lower your interest rate, you can still lower your monthly payments by extending the duration of your loan term. Just keep in mind that if you extend the loan term, you’ll pay more money in interest over the lifetime of the loan.
- Skip a payment – When you refinance your car loan, you can typically skip a payment or two while the new loan is being processed. This will infuse some short-term cash into your budget that can be used to pay down other debts.
iLending Can Help You Refinance After a Car Accident
For many people, refinancing after a car accident is possible, and it can potentially provide significant financial relief if you’re struggling to pay your bills. Due to the potential challenges that may arise when refinancing after an accident, it’s important to work with an expert who can help you navigate the process. At iLending, our exclusive You First Approach™ makes car loan refinance easy and hassle free.
With our unique approach, you’re paired with a loan consultant who will discuss your refinancing goals with you in detail. If your vehicle has been involved in an accident, make sure to inform your loan consultant to ensure this is factored into the loan shopping process. Our loan consultant will compare loan options throughout our network of over 50 nationwide lenders to find the best possible solutions that align with your goals. Your loan consultant will review these options with you and recommend the right solution for your needs. We’ll answer any questions you have in order to ensure you understand your options and can make a fully informed decision.
Once you choose a loan, our team will handle the entire process for you, including filling out all paperwork and following up with your existing lender to make sure your loan is paid off properly. You’ll experience a smooth process from start to finish without any of the headaches that commonly occur when you handle the entire refinance process on your own.
On average, customers save $133/month when they refinance a car loan with iLending. This can infuse your monthly budget with a significant amount of cash that can be used to pay off other debts, save for a big purchase, make improvements on your home, take a vacation, or simply make it easier to pay your monthly bills.
Apply now to get the car loan refinance process started.
What would you do with an extra $132* in your pocket?
