How To Refinance A Car Loan - Money Under 30
Refinancing your auto loan can save you money in interest or lower your monthly payment. Here's how to refinance your auto loan.

Locking in a low interest rate should be your first priority when financing a car—or when financing anything, for that matter.

Over time, cars depreciate, while the cost of maintenance and repairs add up. Considering the double whammy of lower value and higher costs, it’s smart to pay as little as you can in interest on your car loan.

You might want to refinance your car loan for any of the following reasons: Your interest rate feels disproportionately high, your monthly payments are too much, your original car loan makes it impossible (or exceptionally difficult) to pay it off early, or your old loan used precomputed interest, which means that you’ll pay the same amount of interest regardless of whether it takes you the original four-year term or half that.

It’s also possible that the lending landscape has changed since you took out your loan: Rates might be lower, and your credit may be improved.

It’s also possible you’ve taken a job at a lower salary, or experienced an unexpected job loss, and need to make lower payments on your loan.

Why you might want to refinance your auto loan

We already know lower interest rates are the main incentive for refinancing your auto loan. A lower interest rate can save you hundreds or even thousands of dollars throughout the life of your repayment term. (Don’t believe us? Play around with our car loan calculator for a bit, and see how much difference one percentage point makes.)

Paying interest isn’t throwing away money (if you didn’t pay it, you couldn’t borrow money, and couldn’t buy a car!), but it’s close. I wish I had looked into refinancing my auto loan when I had one because my interest rate was very high. When I started making payments, at least $100 of my monthly payment went toward interest alone.

Another reason why you might want to refinance your auto loan would be if you’ve been having trouble with making payments and would like to extend your term or lower your monthly payment.

While extending your term can most likely cause you to pay more interest over the life of your loan, it can make your monthly payments more affordable if your budget or income has changed and you need extra money to cover other expenses.

If you’re unhappy with your auto loan, you should look into refinancing. At worst, you’ll discover the deal you’ve got is the best available. At best, you might save yourself some serious money or give your monthly budget some breathing room.

How to refinance a car loan

1. Check your credit

You’ve got to have decent credit for refinancing to make sense. If your credit score is low, you may not be able to qualify for a better loan.

It’s important to check your credit score and report before submitting a refinance application so you know exactly where you stand. If you’ve been paying your car note on time for the past few months, your credit may reflect that, and you may have access to better deals and lower rates.

On the other hand, if you have missed payments or carry large balances on your credit cards, your credit may need some work before you apply. You can go to to review your credit report, but you should also use a credit score tracking service to figure out where your FICO score falls.

Refinancing your auto loan will save you the most if your score has gone up since you first took out your car loan. While a credit score better than 700 will get you the best auto loan rates, car loan rates can vary dramtically for people with poor, fair or average credit scores—it definitely pays to shop around!

2. Confirm the details of your existing loan

Before you start shopping around for a new loan, it’s important to understand all the terms of your current loan first. This may mean dragging out all the paperwork you initially received when you financed your car.

Make sure you know details like how long your term is, what your current interest rate is, your minimum monthly payment, and the remaining balance on your loan.

Knowing the ins and outs of your current loan will make it easier for you to determine whether a new loan is worth it.

3. Compare competing offers from different lenders

When you start shopping around and looking at other loans, make sure you read through the details carefully and compare different offers from lenders side by side—as well as next to the terms of your existing loan.

The best place to start is with your current lender. Tell them you are interested in refinancing your auto loan and ask them what type of loan they can offer you. If they want to keep you around as a customer, they should try to offer you some better terms.

You can also check with other banks and auto financing companies either in person or in the comfort of your own app德扑圈官方网址home by using trusted services like LendingTree. By completing LendingTree’s short form on their auto loan refinance page, you can see various different offers all customized to your needs and preferences.

When you find a loan that appeals to you, make sure you are aware of any servicing fees or any possible early repayment penalties before gathering the necessary documents to submit your application.

Take a look below at the very best options for personal loans. All you have to do is fill in both your personal information and requirements for your loan. With a click of a button, you’ll find the lending partners that best match what you’re looking for.

How much could you save? Get personalized auto refi rates now

4. Ready your loan application

To submit your loan application, you’ll need:

  • Basic personal information like your employment status, income, Social Security number, address, etc.
  • Information about your vehicle like the VIN number, current mileage, model and year.
  • Information about your current loan like your balance and lender name

Your lender may also want to know information like your assets, your current debt load, and, of course, your credit history before making a decision. If you apply online, you’ll just need to ize the lender to view these documents digitally.

5. Close on your new loan

If you get approved, the lender will close on the loan and pay off your existing car loan. You may be faced with a small processing fee or a state re-registration fee (typically around $5).

You’ll also need to make sure the car’s title is transferred to the new lender, which is very important. At this point, all you need to do is continue making on-time payments on your new car loan.


If you think your interest rate is too high, or are struggling to make your monthly payments, it’s worth giving refinancing a look. Auto loan terms are getting longer and longer these days.

If you have good credit and can obtain more favorable terms, ask your current lender if you can refinance, and then shop around to compare other auto loans. You never know what you might qualify for unless you put forth the effort and do your research.

Visit LendingTree to see what auto refinancing rates you qualify for.

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