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Refinancing auto loan with negative equity?

Can you get auto loan refinancing with negative equity?
Can you get auto loan refinancing with negative equity? Yes - but it all depends how MUCH negative equity and understanding the negative equity. Bank lending is all dependent on LTV or Loan to Value. The Value is determining by a third party - normally Kelly Blue Book, Black Book, or NADA guides. So for lending, you want to make sure the lender knows how "valuable" your car is, so ensure to provide a complete list of the trim, options, and features to the lender OR better yet provide the lender with a window sticker to ensure they have accurate information and have checked off all options and features your car has.

Most lenders have pretty strict rules on "LTV" or the amount of loan relative to value. These typically vary by credit score or income but here are some rough rules based on observed experience with credit unions.

  • Good Credit (720+) can loan up to 130% of LTV. Or can lend $13,000 on a car valued at $10,000.
  • Medium Credit (660-720) can lend up to 115% of the vehicle LTV. So 11,500 on a $10,000 loan
  • Lower Credit (600-660) can typically lend up to 100% of the vehicle LTV.
  • Bad Credit (<600) can typically lend a maximum of 80% of the value of the vehicle. Or get an $8,000 loan on a $10,000 vehicle.

The other things to keep in mind is that if the vehicle is older then typically LTV does down by 10-20% (so a 2008 vehicle may only be eligible for 70% of LTV for a bad credit customer).

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