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Can I Refinance My Car Loan If I Have Negative Equity in the Vehicle?

Negative equity, also known as being upside-down or underwater in your loan, is when you owe more on your vehicle than it’s worth. There are some car loans that seem designed to give you negative equity in your vehicle. High-interest car loans on new vehicles will almost certainly combine with depreciation of the car so you end up with negative equity. It’s no wonder you’d want to refinance in a situation like that!

But can you refinance a car loan when you have negative equity in the vehicle? Yes, but it’s not easy. To be able to refinance in this situation, you’ll need:

If You Want to Try Refinancing with Negative Equity

If you are in a bad situation with your current car loan, it might be worth trying to refinance. At iLending, we make this easy. It only takes minutes to see if you prequalify for refinancing, and it won’t affect your credit rating.

If we find that you might qualify for refinancing, you can take advantage of our You First Approach™ to refinancing. We’ll connect you with a personal loan consultant who will help you shop for potential refinancing opportunities. With access to local community and nationwide lenders, plus extensive experience in car refinancing, your personal loan consultant will help you track down more refinancing possibilities than you can find on your own.

Despite this, you might not be able to find refinancing when you have negative equity in your vehicle. Then it’s time to take steps so you can be successful when you try again.

How to Improve Your Odds of Refinancing with Negative Equity

improve your credit score before refinancing your car loan If you can’t find refinancing with negative equity now, there are some steps you can take to make it more likely in the future. These include:

Improving your credit rating always opens up new car refinancing opportunities. Having a good credit rating is especially important if you are upside-down in your car loan. Having negative equity makes you look like a bad risk, but having a good credit rating minimizes this risk so lenders are more likely to offer you a loan. Just making all your regular payments on time and not adding new debt can help here.

You can also reduce negative equity by paying down your car loan principle. Anything you can do to reduce the negative equity helps, even if you can’t eliminate it completely. It isn’t as hard to do as you might think, either. Depreciation hits new cars fast, but then slows down. Once your car stops depreciating as quickly, it’s easier to catch up on negative equity.

You can also pay down other debt. When you have less debt overall, your credit score may go up, and lenders are more likely to take a chance on you despite negative equity.

If you can improve your income, this might also be helpful for refinancing. Lenders look at your income when deciding whether you’re a good risk. The higher your income, the better your odds of getting refinancing.

Your personal loan consultant might be able to give you targets to hit in order to qualify for certain loans.

iLending Can Help You Find Refinancing Opportunities

Refinancing isn’t easy when you have negative equity in your vehicle. But it’s not impossible. Let a personal loan consultant from iLending scour the local and national lending opportunities to find ones you might be able to qualify for.

Please use our online application tool today to see if we can help. It takes just minutes and won’t affect your credit score!

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