Best Auto Refinance Options for Good, Fair, & Bad Credit

Are you paying more for your monthly car loan payments than you’d like? If so, you’re not alone. There are many people who find themselves with a less than optimal deal, and possibly even with payments they can no longer afford. The good news is, you can refinance your loan to lower your monthly costs and the amount you’ll pay in the long run.

Worried your credit may not be good enough?

Don’t worry, there are plenty of options whether you have good, average or bad credit and we will share some of the top lenders with you in this article. But first, you need to know whether you’re in a good position to get your loan refinanced.

Here are some guidelines that will help you figure out when it’s a good idea.

When is it a good idea to refinance your auto loan?

When interest rates go down

If you happened to get your car when interest rates were higher than they are currently, it’s a good time to consider a refinance. By doing so, you may be able to take advantage of a lower annual percentage rate.

When your credit score goes up

If you had a bad credit rating when you got your car loan but have made improvements, you may qualify for a better interest rate now. Check your free credit report here to see how you stand currently.

When you got a bad deal with your car loan

Another good time to consider refinancing is when you shop around after getting your car loan and realize you got a bad deal. Whether it was the excitement of getting a new car or a not-so-honest car sales associate, it can happen. Refinancing allows you to reset the terms.

When the payments are more than you can handle

You might have overestimated your financial capacity to afford the car you bought, or maybe a medical or other emergency suddenly put you in a bad financial situation. Refinancing can help you lower your payments.

We’ve covered reasons to refinance your auto loan, now here are a few situations when you should avoid it.

Your current auto loan has prepayment or termination penalties

In this case, make sure that the savings you incur from refinancing the loan outweigh the penalty you’ll have to pay.

When refinancing means a longer loan period

It’s not wise to trade in your loan for a longer one, say a 36-month agreement for a 60-month. The interest rates will cost you more in the long run. There is an exception, though, if it is your last way of making your monthly payments and the alternative is defaulting on your loan.

When the car is worth less than the loan’s unpaid balance

It doesn’t make sense for a lender to refinance your car if you are upside down on it, so they probably won’t.

When you’re disqualified for refinancing

Some lenders won’t refinance a car that’s over a certain age, others will refuse if your car’s outstanding balance is too high. In these cases, you can’t get your loan refinanced, so be sure to look out for restrictions when shopping for a lender.

Think you’re in a good position to have your auto loan refinanced? Great! Here are some lenders we recommend checking into for good, fair or even bad credit.

Best auto refinance options for good credit

Lightstream

Lightstream is one of the leading providers for unsecured auto loans. It has a quick approval process that can be completed within a day. It also has some of the best interest rates along with no prepayment penalties, origination fees or other hidden charges. You should especially consider this lender if you’re planning to get a motorcycle or an RV, as it is one of the few that approves loans for these vehicle types.

Loan terms

  • Loan amount: $5,000 to $100,000
  • Minimum APR: 2.19%
  • Max loan term: 84 months.

US Bank

U.S. Bank offers a variety of loan options along with favorable interest rates. After applying, it will let you know whether they can help you to lower your payments or pay off your loan sooner. It offers a few programs to help you save on your interest rates and offers an easy application process online.

Loan terms

  • Loan amount: $10,000 to $100,000
  • Minimum APR: 2.49%
  • Max loan term: 72 months

Bank of America Auto Loans

Apart from competitive interest rates, Bank of America offers a wide network of branches that you can take advantage of. This is great if you like doing business in person; if you don’t, you also can use their comprehensive online application process as well. It is known for being more flexible with loan approvals for high mileage vehicles, as well as vehicles that are slightly older.

Loan terms

  • Loan amount: $5,000 to $1 million
  • Minimum APR: 2.49%
  • Max loan term: 72 months

Best auto refinance options for fair credit

Blue Harbor

 

Blue Harbor caters to people who want to refinance their car loan, as well as those who want to buy a new or used car. It makes use of its connections with credit unions and lenders to help clients find good rates among a wide variety of loan programs. Aside from matching its clients with the right lenders, it also offers great follow-up services to ease the loan process.

Loan terms

  • Loan amount: $7,500 to $100,000
  • Minimum APR: 1.99%
  • Max loan term: 72 months

Up2Drive

Up2Drive is a division of BMW North America that specializes in auto loan financing. It finances all makes and models, but the car can’t have more than 90,000 miles and must meet other eligibility criterias. To apply, go to its website and fill out the application. If approved, it  sends you cash to use to pay off your old loan and set you up with new terms through them.

Loan terms

  • Loan amount: $7,500 to $50,000
  • Min APR: 3.29%
  • Max loan term: 72 months

iLending Direct

With interest rates as low as 0.99%, iLending Direct is one of the best options for someone with a fair credit rating. It partners with many banks and credit unions to find the best rates, then creates a customized solution based on your unique situation. Its main focus is helping customers easily lower their car loan payments and interest rates.

Loan terms

  • Loan amount: $7,500 to N/A
  • Minimum APR: 0.99%
  • Max loan term: 84 months

Best auto refinance options for bad credit

Innovative Funding Service

IFS works with clients who have credit scores from 550 to 800+, so your credit rating won’t be a problem for them. Applying for a loan only takes five minutes. After that, you get access to a network of financial advisers through its national call center.

Loan terms

  • Loan amount: Not specified
  • Minimum APR: 1.89%
  • Max loan term: 60 months

Capital One Auto Finance

Capital One is known to lend to people with subpar credit. It offers good interest rates and its restrictions are quite reasonable. Used cars can’t be more than 10 years old and must have less than 120,000 miles on them. It also doesn’t offer financing on motorcycles, recreational vehicles or commercial vehicles.

Loan terms

  • Loan amount: $7,500 to $40,000
  • Minimum APR: 1.99%
  • Max loan term: 72 months

My Auto Loan

With My Auto Loan, your bad credit won’t stop you from getting in touch with up to four lenders in a matter of minutes. It also offers an interest rate calculator to help you make better estimates on the overall costs of your loan. In lieu of a good credit rating, you’ll need to have an income of at least $1,800 per month with no bankruptcies. Additionally, cars must be no more than 8 years old and must have under 100,000 miles.

Loan Terms

  • Loan amount: $8,000 to $100,000
  • Minimum APR: 1.99%
  • Max loan term: 72 months

Tips on auto refinancing

Pay more when you can

The quicker you pay back your loan, the less interest you pay. It’s as simple as that. So if there are months you can pay more, do it.

Shop around for options

Finding the best refinancing arrangement means scouring the market for all options possible. Try not to settle for the first good deal you find because you may miss out on something better. Ask experts for advice, read reviews  and don’t be afraid to make inquiries with a variety of lenders. You’ll thank yourself later when your monthly payments are more affordable.

Opt for auto pay if you can

The “auto pay” option found on car loan applications usually comes with a lower interest rate. Be sure to compare the rates and sign up if your financial situation allows it.

Avoid loans with prepayment penalties

Most lenders don’t charge this, but it’s wise to always check. Refinancing doesn’t work well with loans that have termination penalties. To be safe, ask your lender whether there will be a penalty for paying off your balance early.

Get auto refinancing regardless of credit rating

Don’t spend another month paying more than you need to for your auto loan. Take some time to review your current situation and evaluate whether you are in a good spot for refinancing. If the answer is yes, check out these recommended lenders. Your search doesn’t need to end here, either. Compare an extensive list of lenders by heading over to our personal loan page and ticking the box for “auto loans.”

We’ll help you find and compare your options with overviews, summaries and real user reviews.