When you’re making your monthly car payment, have you ever wondered, “Can I lower the interest rate on my car loan?” If not, then you should start thinking about it because it’s possible you could be saving money with an auto refinance.
However, it isn’t always easy finding the lowest auto refinance rates. So, we’ve put together the ultimate guide to make it a little easier.
Why are auto refinance interest rates so important?
The interest rate you get determines how much you will need pay to borrow the loan amount.
Lenders will provide you with your annual percentage rate (APR), which includes the percentage of interest and fees you will pay each year of your loan term. Note, there may be additional fees on top of the APR.
By finding the lowest auto refinance interest rate and APR, you can potentially lower your monthly payment amount and overall loan cost.
How to get the lowest auto refinance interest rates
How do you find the lender that will offer you the lowest rate? Read this before you decide.
First, analyze your current loan. Figure out all the specifications including your APR, monthly payment amount, total cost, term, and the company’s quality of service.
Once you have that information, it’s time to shop the competition.
Many lenders now allow you to apply online and they only run a soft credit check, so it doesn’t impact your credit score. You can get a response in as little as one minute, enabling you to see the rates and terms for which you prequalify.
This information is empowering because you can conveniently find out what dozens of lenders will offer you from the comfort of your home.
After you get quotes and compare offers, you will be able to identify the lowest auto refinance rate. Then, you can weigh other factors such as term length, fees, and customer service to find the best deal overall.
Where to find lenders that refinance auto loans
Many types of financial institutions refinance auto loans. These include banks, credit unions, direct lenders, and marketplace lenders, just to name a few.
It will take hours of research to build a list of potential lenders and then compare them all. Luckily, most of the work has already done for you on SuperMoney’s auto loan refinancing page.
On it, you’ll find a list of industry-leading lenders with a complete overview of each company and their services. You’ll be able to compare rates, terms, and real-user reviews all in one place.
So you can skip ahead and start comparing right away without having to do the research yourself.
You can save even more time by getting pre-approved loan offers. Knowing what you qualify for can help guide your research in the right direction.
With our auto loan engine, you can get multiple personalized offers from vetted lenders without hurting your credit score.
After you answer a few quick questions, you’ll find out within minutes which lenders, if any, you prequalify with. By doing so, you’ll save hours of time that would otherwise be spent on individual applications.
Best auto refinance companies
Of the lenders we have analyzed and compared, there are a few standouts.
Here are five of our top picks:
- LightStream: Very competitive interest rates, the top choice for well-qualified customers, great service, high loan amounts, and no origination fees
- OpenRoad Lending: Great service, competitive rates, no origination fees, and high loan amounts
- LendingClub: No origination fees, good service, and competitive interest rates
- com: Very convenient online services, decent interest rates, and good service
- Autopay: Great for helping customers with bad credit to find an auto loan
The links above will lead you to in-depth reviews of the companies.
When should you refinance a car loan?
Is it the right time for you to refinance a car loan? Well, that depends.
First, most lenders will want to see that your current loan is at least 90 days old. If it is, the next step is to figure out how much you can gain by refinancing.
Your added value can come from lowering your payments, a cheaper overall cost, and better customer service.
On the other hand, the costs can include a longer loan term, fees, and poorer customer service. If you can gain enough value to warrant the costs of refinancing, then you should do it.
Situations that often lead to an increase in auto loan value include:
- Your credit score has increased
- The market has changed causing a drop in rates
- You got a bad deal in the first place
- Your current lender provides very poor customer service
- You need to lower your payments
When is it bad to refinance? Whenever none of the situations above apply to you. (i.e., if your credit score has decreased, if interest rates have gone up, and if you can’t get a better deal).
Average auto refinance interest rates
The average interest rate on a 60-month auto loan in the U.S. is about 4.21%. However, the interest rate you get will depend on several factors such as:
- Your vehicle type
- The age of your vehicle
- Your credit score
- The lender you choose
- The term length you select
For example, according to MyFico’s loan savings calculator, the interest rate on a 48-month used auto loan varies with a borrower’s credit score as follows:
The lower your credit score, the higher your interest rate.
Further, any factor that increases the amount of risk for the lender (i.e., an older vehicle, longer term, etc.) will increase the amount you have to pay to borrow.
However, each company will evaluate risk a bit differently, which is why it is so important to apply with a variety of lenders.
Ready to find your best auto refinance interest rates?
Now you know how to find the lowest auto refinancing rates. It starts by identifying the pros and cons of your current loan. Then, shop around online to see if you can get a better deal.
Remember to compare monthly costs, total costs, and service; it’s not all about the lowest rate. If you can get a better overall deal than you currently have, then make the switch and start saving!
Are you ready to find out what you can get? Click here to see your offers.