When youâre looking to refinance your auto loan, itâs best to check around at multiple lenders for the best rates. Because many lenders today offer online loan options, you can check out the most current offers without putting in the actual legwork of shuffling from bank to bank in person.
See what rates your bank or credit union advertises. Check their websites or call them by phone. Often theyâll give rate discounts when you make automatic payments using one of their checking accounts, which is an easy bar to meet if youâre already a member.
Look at competing lender offers. Whatever your current bank or lender says, compare them to other deals by shopping online. There are dozens of auto loan options out there, but donât be intimidated. Weâll help you find the best places in this guide. It wonât hurt your credit if you apply to a few different lenders for the same type of loan within 14 days, so donât let that stop you from applying to one of the best car refinance companies if something looks good.
Look at what your current lender advertises. Not all companies refinance their own loans, but, for those that do, you might be able to refinance with the same company if you qualify for a lower rate or different term.
In this guide, weâll show you the best places to start shopping for an auto loan refinance, as well as provide tips on how to decide when refinancing is the best move for you.
To help you choose the right lender for your refinance, we picked out some of the best places to refinance a car online. We started by analyzing more than 450,000 auto refinance applications for 17 lenders submitted through the LendingTree marketplace. We then compared and selected the top four lenders that 1. consumers were choosing most often and 2. offered the lowest average APR.
If you are looking to explore your options, LendingTree is a good starting place. Its online auto lender marketplace lets you compare up to five lenders side by side. You can find lenders that offer loans with APRs starting at 3.99% for New car financing. Motorcycle and RV financing and refinancing are available as well. People of all credit scores may apply. After completing a short online form, you may be able to see real interest rates and find out if you prequalify for any offers instantly.
A prequalification is a not an automatic approval. Some auto lenders may not offer a prequalification at all and they may require you to submit an application for approval.
How to apply
Go to the LendingTree website and fill out the prequalification form. Youâll need the vehicle information, your information, including contact, loan, employment and income details on hand.
LendingTree is our parent company. LendingTree is unique in that they allow you to compare multiple, auto loan offers within minutes. Everything is done online. LendingTree is not a lender, but their service connects you with up to five offers from auto loan lenders based on your creditworthiness.
Like LendingTree, iLendingDIRECT is an online marketplace where you can potentially be directed to multiple auto lenders. Once you submit an application, the company will shop around for the best loan offers for you. It works with more than 20 financial institutions to offer a wide range of refinancing options, cash back loans, lease buyouts, and more. APRs start at 1.99%. Cars, trucks, motorcycles, boats and RVs can be refinanced; maximum terms and amounts depend on the type of vehicle.
Either call them or fill out a short contact form online and theyâll reply to you. You should have your personal contact information, your vehicleâs year, make and model, and your loan information at hand. With this information, theyâll find the best offers youâre pre qualified for, and you can choose from those which loan youâd like to apply for.
rateGenius is another online loan marketplace, but this one specifically works with borrowers seeking to refinance. They have a network of 150 lenders around the country. APRs start at 2.99% and loan amounts and maximum and minimum loan terms will vary depending on the type of vehicle.
The original loan term may be shortened or lengthened, though usually rateGenius will match the term of your new refinanced loan to the amount of time left on your original loan.
Give them a call or fill out an online application form. You should have the following information ready.
The online loan marketplace AutoPay works to provide refinancing to people at different levels of credit. The minimum loan term is 24 months, while the maximum goes up to 84 months. You have to have at least $5,000 remaining on your loan and no more than $100,000. APRs start at 1.99%.
Visit its website to fill out an online prequalification form. Youâll need your driverâs license, a payoff letter from your current lender, proof of insurance on the vehicle, proof of income and proof of residence. Autopay then works to find the best refinancing offers for which youâre pre-approved, and you can choose which to apply to.
There are different ways to ditch a bad auto loan, or simply improve your payments to suit your current cash flow, and refinancing is a great way to do it.
Nicolas Ortiz, an auto insurance agent and adjuster at USAA headquarters in San Antonio, Texas, has worked in the industry since 2011 and did a stint as a finance manager at a car dealership for over a year.
âMost people look to refinance in order to lower their payment,â he said, âand you can get other benefits that come with it.â
Hereâs more about the benefits of refinancing:
Get a better interest rate. If your credit has improved from when you first signed for the loan, you may qualify for a lower APR. âIf you apply to refinance and get a lower APR, not only will your monthly payments be lower, but the overall interest that you pay will be lower, too, if you keep the same term.â Ortiz explained.
Decrease your monthly payment. If youâre strapped for cash, a lower car payment can make a big difference. It could give you some breathing room or prevent a repossession. To get a lower monthly payment, you may refinance with a lower APR, refinance for a longer term or both. Keep in mind your total interest cost may be higher over time when lengthening the term of the loan even if the APR is low.
Decrease your loan term to reduce interest payments. The less time you spend paying back a loan, the less you are likely to pay in interest payments. âTo lenders, a greater length of time means a greater amount of risk; greater risk means more interest.â Ortiz told MagnifyMoney. Decreasing your loan term when you refinance will likely decrease your APR, but increase your monthly payment.
If you donât want to commit to a bigger monthly payment when you refinance, one way to get a similar result is to simply refinance to get a better APR, then make monthly payments that are larger than the required monthly payment. This way youâre going to pay the loan off faster and pay less interest, but you have the option to make the lower required monthly payment if funds are tight.
Double-dip. If you have excellent credit and finance through a manufacturer when buying a new car, you usually have a choice of either getting a low APR, or getting large rebates from the manufacturer. âWhat you can do is if you qualify for manufacturer financing, take the rebates, sign up with them, and then turn around in a month and refinance with a credit union or bank that will give you a lower APR.â Ortiz said. You get the rebates from signing up with the manufacturer and the low rate from refinancing.
A refinancing company may offer you add ons like GAP insurance or a warranty, which is also called a vehicle service contract (VSC). Make sure you know exactly how much each costs you and what it does. Donât just say yes to a monthly payment that includes it.
GAP insurance stands for Guaranteed Asset Protection and covers the debt on the car that your auto insurance company doesnât. For example, if you get a new car, donât give a down payment, and crash the car a month later, what you owe on the car will be more than what the car is worth. GAP insurance covers the âgapâ between what you owe and what the insurance company pays.
An extended warranty, also called a vehicle service contract (VSC), is an insurance product that will cover certain repairs to the vehicle. It is not your regular car insurance and wonât cover car repairs if youâre in a crash. It will generally cover repairs if something breaks from wear and tear.
For example, if your AC goes out because you live in a hot climate and like to make your car an ice box in the summer, the VSC might cover it. It depends on what type you get. It can be complicated, so, if youâd like one, know that you can negotiate on it and make sure you know what you get for the price you pay.
While you can refinance at anytime, some people try to refinance when it may not make much of a difference, or may make a difference in a worse way.
Here are some questions to help you figure out if refinancing your auto loan is right for your situation.
Has your credit changed significantly?
If your creditâs gone up enough to push you into a higher score band (from âfairâ to âgoodâ for example), you should definitely check out the best auto refinancing companies to see if you can get a deal. You can use LendingTreeâs free credit score tool to check your credit status. Note: LendingTree is the parent company of MagnifyMoney.
If you have a high APR auto loan because of poor credit, has your credit improved?
Many people who have poor credit and little choice but to sign for a high APR auto loan might ask when their credit will improve to the point theyâll be able to refinance at a lower APR â but it really depends on your specific situation. There are steps to successfully improve your credit. Making monthly payments on-time and in-full should help improve your score. Just have patience â lenders typically report payment behavior to the credit bureaus once every 30 days, but that can vary by lender.
If your credit hasnât increased, or itâs dropped into a lower category, refinancing at this time probably isnât right for you.
Do you want to add or remove a co-signer?
By refinancing with a new lender, you may have the ability to remove a cosigner from the original loan. However, you may struggle to get approved for refinancing if your credit is poor, you are underwater on your loan (meaning you owe more than the car is worth) or if you have missed several payments.
If you are looking to add a cosigner to a loan in order to get approved for better loan terms, make sure they understand the pros and cons. Their credit history can be positively affected by you making payments, but they will also be accepting liability for the loan if you fail to make payments.
Are you underwater or upside down?
Do you owe more on the car than itâs worth? If you do, you might want to think about paying down the loan before refinancing. Youâll be able to get the best deal in refinancing if your loan is equal to or less than the value of the car. However, if you know you can get a better rate now, even if youâre underwater, it might be worth doing so. That way, more of what you do pay on the loan goes to the principal and you can pay down the loan faster. Then, once youâre no longer underwater, you can refinance again for an even better rate. Youâre not limited on the amount of times you can refinance.
Are you in danger of a repossession?
If you lost your job, had a family emergency, or just have a lot of trouble making payments, refinancing can make the best of a bad situation. You may not be able to finance into a loan that has a lower APR, but you may get a loan with a longer loan term, which will lower your monthly payments and give you more room to catch up.
Have auto loan rates dropped recently?
National trends in loan interest rates change based on national policy, politics and demand. Rates are expected to continue to increase this year, and indeed, rates hit a five-year high in February 2018. This isnât a good trend for the auto loan consumer, as auto loan rates increase with it. If there is a sudden jump in the national rate for the season, consider refinancing a little later. If there is a sudden dip, like there was in the fall of 2017, itâs a good time to shop around.
When to consider refinancing
When to avoid refinancing
If the car is worth more than you owe on the loan.
If your credit improved significantly from the time you signed the auto loan.
If youâre in danger of a repossession.
If you want to change something with a cosigner.
If your credit has worsened significantly from the time you signed the auto loan.
If you owe a lot more on the loan than the car is worth.
If national interest rates rise by a point or more.
If the car is brand new or really old.
By clicking âSee Offersâ youâll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.