Refinancing with Bad Credit: What Are Your Options? Bad Credit Loan

Dakota DeRego
Jun 25
4 min read

How to Refinance Your Car Loan Even If Your Credit Isn’t Perfect

If your credit score isn’t where you want it to be, the idea of refinancing your auto loan might seem out of reach. Many people assume that bad credit means automatic denial or sky-high interest rates. But the reality is: refinancing with bad credit is absolutely possible—especially if you know your options and work with the right partner.

At Digital Auto Refi Co, we specialize in helping people from all credit backgrounds find better loan solutions. Whether you’ve had past financial challenges or your score has taken a hit due to life events, this guide will walk you through how to refinance your car loan with bad credit—and why it could still save you money.

Why Refinance with Bad Credit?

If you’re wondering whether refinancing is worth pursuing with a low credit score, the answer often depends on your current loan situation. Many people with bad credit are stuck in high-interest auto loans that were set up when their credit was even worse, or through dealership financing that inflated their rate.

Here’s why refinancing could still help, even with credit challenges:

Lower Your Monthly Payment: Stretching the loan term or finding a slightly better rate can provide much-needed breathing room in your monthly budget.
Reduce Your Interest Rate: If your credit has improved—even just slightly—since you got your original loan, you may now qualify for a better rate.
Catch Up on Payments: Some refinance lenders offer programs designed for people looking to avoid falling further behind.
Remove a Co-Signer: If you had someone co-sign your original loan, refinancing allows you to take full responsibility (once you qualify on your own).

Remember: The worst your current loan terms are, the more upside there often is to refinancing.

Lenders Who Work with Bad Credit Borrowers and Give Bad Credit Loan

Not all lenders work with subprime borrowers (typically considered those with credit scores below 620), but many do—and that’s where using a refinance marketplace like

Digital Auto Refi Co can really help.

We partner with over 40 different lenders, many of whom specialize in working with people who have low or rebuilding credit. Instead of applying to multiple lenders one by one, we compare offers for you, so you don’t have to face multiple hard credit pulls.

Some lenders consider more than just your credit score when reviewing your application. They’ll also look at:

Your on-time auto loan payment history
Your employment and income stability
Your vehicle’s value vs. loan balance (Loan-to-Value ratio)
How long you’ve had your current loan

Even if your credit score is in the 500s, there may still be options available—especially if your vehicle has retained good value or if your current interest rate is particularly high.

Tips to Improve Your Refinance Approval Odds with Bad Credit

While Digital Auto Refi Co can help find lenders for all credit types, there are things you can do to boost your approval chances—or to help get a better rate when you do refinance:

Make On-Time Payments:Even if your overall credit score is low, showing consistent on-time payments on your current auto loan can make a big difference.
Pay Down Existing Debt:Reducing your total debt load (especially credit cards) can improve your debt-to-income ratio, making you more attractive to lenders.
Check Your Loan-to-Value (LTV) Ratio:If you owe less than your car is worth, lenders may view your loan as lower risk—even if your credit isn’t great.
Consider Adding a Co-Signer:If you have a friend or family member with stronger credit willing to co-sign, it can improve your approval odds and lower your rate.
Review Your Credit Report for Errors:Mistakes happen. Reviewing and correcting any inaccuracies on your credit report could bump your score up enough to help.

At Digital Auto Refi Co, our prequalification process lets you explore your options without a hard credit pull, so checking your rate won’t hurt your credit score.

What Kind of Rates Can You Expect?

Rates for bad credit borrowers are naturally going to be higher than those offered to borrowers with excellent credit—but that doesn’t mean they’re out of reach. The important thing is to compare offers, watch out for predatory lenders, and look at your total loan savings over time.

For example:

If you’re currently paying 18% APR on a $15,000 loan, even dropping to 12% or 14% APR could save you hundreds (or even thousands) in interest over the remaining loan term.

Plus, refinancing can give you the option to extend your loan term to lower your monthly payments if that’s your priority. Just remember that while this reduces your monthly payment, it may increase total interest paid over time. That’s why working with a trusted partner matters.

How Digital Auto Refi Co Helps Bad Credit Borrowers

Here’s how refinancing with Digital Auto Refi Co makes the process easier—even if your credit score isn’t perfect:

✅ We compare over 40 lenders, many of whom work with low-credit borrowers

✅ Our prequalification won’t hurt your credit score

✅ We offer fast, 100% digital applications

✅ Average customer savings: $130 per month

✅ Flexible loan terms—even for high Loan-to-Value (LTV) customers

✅ Friendly team to help answer your questions and guide you through next steps

We understand that life happens—and that past financial challenges shouldn’t lock you into a bad car loan forever.

Take the First Step Today

If you’re dealing with a high-interest auto loan and less-than-perfect credit, refinancing could still be within your reach. Even small changes to your loan terms can offer big relief over time.

Ready to see your options? Visit www.digitalautorefi.com and start your free pre-qualification today—no hard credit pull required.

View our Rate Chart to understand where you may be!

Your better auto loan could be just a few clicks away.