Deciding whether or not to refinance depends a lot on the status of your current loan. Not everyone, or every car, qualifies for refinancing. We directly compare the requirements of refinancing to common qualifications of bad credit auto loans.

Comparing Requirements of Refinancing and Car Loans

Most borrowers look into refinancing because they want a lower monthly payment. However, if you don’t qualify for refinancing, getting into a less expensive vehicle could be the way to go.

There are bad credit car lenders, called subprime lenders, that can work with tough credit situations such as bankruptcy or a past repossession. If you can prove you have the ability, stability, and willingness to take on an auto loan, a bad credit car loan could be within your reach.

Refinancing doesn’t require a perfect credit score, but not every vehicle or loan can make the cut. Additionally, if you don’t qualify for a lower interest rate with a refinancing lender, it doesn’t save you any money.

To help you decide which route to take, we created a table that directly compares common refinancing and bad credit auto financing requirements:



  Bad Credit Car Loan 

Opportunity for credit repair?



Good credit score required?



Keep your current vehicle?


No, if you trade it in

Need equity in current loan?



Car must be under 10 years old?



Vehicle needs less than 100,000 miles?



Need verifiable income?



Down payment requirement?



*Credit score usually must be better than it was at the start of the car loan to refinance.

**For a trade-in to lower your next vehicle’s selling price, it needs equity, but having equity in your current loan isn’t necessary to qualify for your next auto loan.

Reasoning Behind These Requirements

Refinance or Bad Credit Auto Loan?Keep in mind that every refinancing and subprime lender varies in their specific requirements, but knowing the common requirements is a good place to start.

Most subprime lenders don’t finance cars that have more than 100,000 miles or are over 10 years old. Refinancing lenders tend to stick to those similar guidelines as well. It’s not in a lender’s best interest to refinance or finance an older vehicle.

To refinance your auto loan, it must have equity. A lender won’t refinance a car that has a higher loan amount than what the vehicle can sell for. Additionally, to use your current car as a trade-in as a down payment on an auto loan, the vehicle must have equity to lower the next car’s selling price.

If you owe more on the trade-in than it’s worth, you’re probably not going to get a large enough trade-in offer to cover your loan amount and have anything left over to put toward the next vehicle purchase.

Trade-ins with equity can also help meet down payment requirements. So, if you have a lot of equity on your current auto loan, it can really knock down the amount you need to finance and meet a subprime lender’s requirement. Subprime lenders typically require at least $1,000 or 10% of the car’s selling price.

Bad Credit Got You Down?

It’s easy to feel like you don’t have a shot at refinancing or an auto loan because of a lower credit score. However, you probably have more options than you think.

You don’t need a perfect credit score to qualify for refinancing or a car loan, if you work with the right lenders. Refinancing typically just requires that your credit score has improved since you first started the loan, and that you’ve stayed current on your vehicle payments. A refinancing lender may still require a decent credit score, generally over 600 (though this can vary).

Auto financing can be difficult with traditional lenders, but subprime lenders fill the gap. They look at more than just your tricky credit history, and if you meet their requirements, your credit score can improve if you handle the loan well.

Need Help Finding Connections?

Finding the right lender for your next car loan doesn’t have to be difficult if you start with us. Here at Drivers Lane, we’ve been connecting borrowers to the bad credit connections they need with our free auto loan request form.

Once you complete it, we search for a local dealer in your area that has the bad credit lending resources. Get started right now!