Dear Driving for Dollars,
My family has been hit hard by the economy. We are struggling, and our credit is shot.
I know there are some options out there for homeowners to refinance their home mortgages to help them get back on their feet. Are there similar options to refinance a car loan?
— Tony
Dear Tony,
I’m sorry to hear that your family is struggling. Unfortunately, there’s no similar program to refinance your car loan. Refinancing typically requires at least a medium credit score. There are also some other requirements relating to your car. Read Bankrate’s “Refinancing a car loan when money is tight” for some tips.
Since it sounds like you are having financial problems, call your lender and explain your situation to see if your car loan can be modified. While it most likely won’t let you refinance if your credit is lousy, the lender may modify the loan by extending the terms to help lower your monthly payments.
This is certainly far less than ideal, but it may be the only way to make your car loan affordable. Making your car loan payments on time is important because you do not want to have your car repossessed as you not only lose your car but will seriously damage your credit.
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