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Best Auto Loan Refinancing Companies | December 2022

Auto loan refinancing can help you save money by lowering your auto loan monthly payments. However, not all auto refinancing companies are made equal. Here is our list of the best auto refinancing loan options.

Are you paying more than you should on your auto loan? Many borrowers are. The only way to know if you are one of them is to check what rates and terms you currently qualify for. The good news is that refinancing your auto loan is fast and easy. It only takes a few minutes to find out what your best rates and terms are.

Refinancing your car loan could save you thousands of dollars in interest over the life of your loan. It can also help you reduce your monthly payments or even get extra cash. Check what rates and terms you qualify for with the most-recommended auto refinance lenders.

How does auto refinancing work?

Refinancing a car loan involves taking on a new loan to pay off the balance of your existing car loan. An auto refinance can save you money by lowering your interest rate. It can also lower your monthly payments (without a change in interest rates) if you extend the term of loan.

Some lenders will also allow you to take out additional cash when you refinance. However, increasing the balance of your auto loan can be expensive and puts you at risk of owing more than the value of the car.

How to find the best auto loan refinance?

The Consumer Finance Protection Bureau (CFPB) recommends getting preapproved by multiple lenders, so they compete for your business. This puts you in a stronger negotiating position for whichever lender you choose, which can help you lower your total cost. The lenders above are an excellent place to start when shopping for the best rates and fees in the market.

Fill this short form to find out what loan offers you can qualify for with leading lenders. This will not hurt your credit.

When should you refinance your auto loan?

Refinancing your auto loan can save you money and lower your payments. However, it's not for everyone, and there are times when it doesn't make sense to do so. Here are a few scenarios in which refinancing can be a good idea.

  • If you didn't comparison shop for your auto loan, you might not have gotten the best available rate.
  • If you've raised your credit score, gotten a raise, or paid off other debts since buying your car, you could qualify for a better rate now.
  • If more competitive rates are available now than when you purchased. Rates for the lenders in our list of best auto refinance loans start at 1.99%. So if rates were higher when you bought your car, you might be able to take advantage of a lower rate. Just make sure to factor in any fees involved in refinancing when making your decision.
  • If you're unable to make your monthly payments, you may want to refinance to get a longer loan term, even if your interest rates don't change.

What should you consider when refinancing

When shopping for an auto loan refinance, it is important to compare multiple lenders as rates and fees can vary considerably. Here are the most important things to consider when applying.

  • Your credit score. The best rates are reserved for the highest FICO scores. But if you shop around for your loan, even those with fair to good credit scores can find a lender with competitive rates.
  • Your remaining balance. Many lenders have minimum and maximum auto loan amounts. Make sure that your desired lender refinances loans of your size before applying.
  • Origination fee. Most lenders charge a fee to process a new loan. If this fee is more than what you will save by refinancing, it isn't worth it.
  • The age of your car and miles on your vehicle. Many lenders will only consider newer cars will low mileages..
  • Timing. Most of the time, refinancing won't work unless you've made at least six to 12 months of payments on your original loan.
  • 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 autopay 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 a good idea to check. To be safe, ask your lender whether there will be a penalty for paying off your balance early.

Frequently Asked Questions

Who has the best auto refinance rates?

Interest rates vary widely depending on the lender, but they also change a lot depending on your credit score and income. So, there isn't a straight answer to "who has the best auto refinance rates?" The answer changes depending on who is asking. The lowest rates in our list of best lender is 1.99%, but not everyone can qualify for a rate that low. Complete this short form to find out what rates you qualify for with leading lenders without hurting your credit.

How long should I wait to refinance my car?

Wait at least 60-90 days from getting your original loan to refinance. It typically takes this long to transfer the title on your vehicle, a process that will need to be completed before any lender will consider your application. Refinancing this early typically only works out for those with great credit.

Does refinancing your auto loan hurt your credit?

Refinancing your auto loan can hurt your credit in two different ways.

First, applying for a loan usually requires a hard credit pull, which can ding your credit score. However, the money you can save through auto refinancing often outweighs the adverse effects of a small drop in your credit score. Most credit scores treat the loan inquiries performed within a 14- to 45-day period as a single inquiry, which will minimize the hit to your score. However, it is a good idea to only apply with lenders who allow you to check your rates without a hard pull on your credit.

Secondly, auto refinancing requires you to close your existing auto loan account. This will probably lower the average age of your credit accounts, which can affect your credit scores because most scoring models take into account the age of the credit accounts on your credit report. Again, the savings you get from auto refinancing will typically justify the drop. And as long as your old account was in good standing and you continue to pay down your new loan, it shouldn't take long for your credit score to improve again.

Do you have to put money down to refinance a car?

Most lenders only consider refinancing if you owe from $7,500 to $30,000, provided your car is less than five years old and worth at least what you owe. If you are upside down, meaning you owe more than the car is worth, you may need to pay the difference to refinance.

Is it better to refinance with your current lender?

It depends on what terms and rates your current lender offers. Some lenders will not provide refinancing to existing borrowers. You can sometimes save time and money by sticking with the same lender. However, even if you're happy with your current lender, it is still a good idea to check what rates and terms other lenders are offering.

Why should you refinance your auto loan?

Refinancing your auto loan could help lower your monthly payments by lengthening the term of your repayment. Or it could help you save money through a lower interest rate.

What do you need to refinance a car?

The information you need to refinance a car loan can include proof of income, proof of insurance, and proof of identity. You will also need the car's make and model and vehicle identification number (VIN), as well as the auto's current mileage.

How much will it cost to refinance my car?

Typically, the only fees associated with an auto refinance loan are the lien transfer fees (usually $5 to $10) and state re-registration fees ($5 to $75). Fees may vary considerably by lender, state of residence, etc. Be sure to check if your existing lender has any prepayment fees.

Next step

Don't assume you have the best rate possible. Dropping your interest rate by just two percentage points can save you more than $1,000 in interest payments on a typical car loan. Click here to find out what loan offers you prequalify for and discover how much you could save on your auto loan payments. This will only take a couple of minutes and it will not hurt your credit.

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