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The best auto refinance companies offer transparent, reliable service to consumers looking for competitive rates from a variety of lenders, including banks, credit unions and non-depository financial lenders.

Your potential savings will be determined by multiple factors — credit score, annual income and the outstanding amount of your current loan — and the importance of each will depend on the individual auto refinance company.

Read on to see our top picks for the best auto refinance lenders of 2023 and learn how to get the most competitive loan terms that fit your needs.

*Rates and APYs are subject to change. All information provided here is accurate as of December 29, 2023.

Money’s Main Takeaways

• The lowest starting annual percentage rate this month is 4.50% via LendingTree

• LendingTree is our pick for best marketplace for easy comparison of potential offers

• PenFed is our pick for best direct lender for its competitive APR and lack of extra fees

• iLending offers a full-service auto refinance loan experience, including vehicle title change and previous loan payoff

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Our Top Picks for Best Auto Refinance Companies of January 2024

• LendingTree – Best Marketplace
• RateGenius – Runner-up for Best Marketplace
• PenFed Credit Union – Best Direct Lender
• OpenRoad Lending – Best for Low Credit Scores
• Auto Credit Express – Runner-up for Best for Low Credit Scores
• myAutoloan – Best for Fair Credit
• Gravity Lending – Best for Good Credit
• iLending – Best for Full-Service Auto Refinance
• LightStream – Best for Any Kind of Vehicle
• Digital Federal Credit Union (DCU) – Best for Newcomers to Credit Building

Best Auto Refinance Company Reviews

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Pros

• Compare up to five auto refinance loan offers
• Sizeable lender network covers a variety of borrower profiles
• Minimum credit score, loan terms and other lender details listed

Cons

• Document fees may apply
• Borrowers must complete loan process directly with lender

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HIGHLIGHTS

Starting APR

4.50%

Minimum Credit Score

Low 500s

Loan Amounts

Varies by lender

Loan Terms

12 to 84 months

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Why we chose it: LendingTree is our pick for best marketplace for its varied lender network, which covers a wide range of credit scores and auto refinance loan needs.

LendingTree offers a network of approximately 40 lenders across the U.S., including banks, credit unions and other financial institutions. When you apply — which requires only a soft credit pull, and won’t impact your credit score — you receive up to five matches.

On the website, you can find important lender details, such as starting APRs, loan terms, loan amounts and the minimum credit score required. However, some pertinent information, such as loan closing costs, is not available. Additionally, not all lenders are listed. If you get an offer you like, be sure to check these details before completing the loan application process.

Read our full review of LendingTree Auto Refinance >>>

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Pros

• Approximately 200 lenders in its marketplace
• Average savings claim of $101 per month
• Approval decisions in 48 hours or less
• Co-borrowers allowed

Cons

• Best for credit scores of 660 and higher
• Partner lenders may charge fees, such as prepaid finance charges or origination fees

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HIGHLIGHTS

Starting APR

4.67%

Minimum Credit Score

550

Loan Amounts

Starting at Starting at $8,000

Loan Terms

24 to 96 months

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Why we chose it: RateGenius is our runner-up for best marketplace because it has one of the most extensive lender networks in the auto refinance industry.

RateGenius has about 200 lenders in its auto refinance marketplace, making it easy to shop around for the best rate. However, the platform is best for people with credit scores of 660 and higher. As with any auto refinance company, the better your credit score, the more likely you are to be offered the best rates.

However, there are options for people with lower credit scores. Additionally, co-borrowers are permitted, which can help your chances of approval — particularly if that co-borrower has a strong credit history.

Read our full review of RateGenius Auto Refinance>>>

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Pros

• Average monthly savings claim of $191
• Prequalify with a soft credit pull
• Automatic PenFed membership with loan processing
• Add-ons available, including GAP insurance, vehicle protection and debt protection

Cons

• Higher starting APR for vehicles with 7,501 miles or more
• Borrower is responsible for previous lease payoff and vehicle title change

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HIGHLIGHTS

Starting APR

5.94%

Minimum Credit Score

640

Loan Amounts

$500 to $150,000

Loan Terms

36 to 84 months

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Why we chose it: PenFed Credit Union takes the title of the best direct lender for auto refinance loans because it doesn’t charge document fees or origination fees, and its annual percentage rates are competitive.

Pentagon Federal Credit Union (PenFed) is a direct lender with no extra fees added to its auto refinance loans. Many auto refinance marketplaces impose document fees or origination fees, and in return, the company handles the original loan payoff. With PenFed, you’re responsible for this task, as well as changes to the vehicle title. Still, the lack of fees helps cut your total loan repayment.

You can see loan offers without negatively impacting your credit score on the credit union’s website. PenFed allows for auto refinance loans of up to $150,000 or 125% of your current loan balance. However, to qualify, the vehicle cannot have more than 125,000 miles.

OpenRoad Lending regularly works with customers with low credit scores, says company representative Justin Helms. The minimum credit score requirement stands at 500 currently. Helms adds that there are agents available for anyone with questions or in need of guidance throughout the auto refinance process.

OpenRoad Lending accepts cars up to 15 years old, which is considerably more flexible than the 10-year industry average. There’s more leeway in mileage, too: Most companies won’t go beyond 150,000, but OpenRoad Lending accepts autos with up to 160,000 miles.

Co-borrowers are also welcomed, and if the person signing on along with you has good or excellent credit, this can increase your chances of getting the lowest auto refinance rates.

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Pros

• Accepts credit scores as low as 525
• Payment deferrals for qualified borrowers
• Excellent educational resources for borrowers
• Low starting loan amount

Cons

• Low maximum loan amount
• Higher interest rates for low credit borrowers
• No add-on products (e.g. GAP, vehicle service contract)

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HIGHLIGHTS

Starting APR

Undisclosed

Minimum Credit Score

525

Loan Amounts

$5,000 to $50,000

Loan Terms

Varies by lender

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Why we chose it: Auto Credit Express is our runner-up for best for low credit scores because it accepts borrowers with credit scores as low as 525.

Auto Credit Express specializes in helping customers with bad credit or recent bankruptcies or repossessions get better refinance loan rates through its network of lenders. Its minimum credit score requirement is 525. Additionally, lenders available through Auto Credit Express consider borrowers’ financial responsibility when determining approval and loan terms.

For example, if you’ve consistently made on-time payments to your existing auto loan for six months or more, your chances of getting better terms through an auto loan refinance are greater — even if your credit score is low. Auto Credit Express claims that more than 40 percent of its customers save at least $80 per month.

Read our full review of Auto Credit Express Auto Refinance>>>

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Pros

• Rates start at 4.49% for borrowers with excellent credit
• Compare up to four loan offers online within minutes
• Average savings claim of $150 per month

Cons

• Not available in Alaska or Hawaii
• Maximum vehicle mileage of 125,000 miles (or 120,000 miles for private party loans)
• Some lenders may charge fees or a down payment

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HIGHLIGHTS

Starting APR

4.99%

Minimum Credit Score

575

Loan Amounts

$5,000 to $150,000

Loan Terms

24 to 84 months

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Why we chose it: myAutoloan is our runner-up for best auto refinance company for fair credit thanks to its competitive rates, even for borrowers with credit scores as low as 575.

MyAutoloan recommends a credit score of at least 575 for the best offers and low rates. However, the bulk of its customers, company representative Staci Bailey tells Money, have FICO scores ranging from 620 to 680. Borrowers should also have a monthly income of at least $1,800.

The company’s Auto Loan Interest Rate Estimator can give you a good idea of what your APR might look like, and you can use this tool without providing any personal contact information that could result in communication from myAutoloan about potential offers.

When a customer fills out myAutoloan’s form, the (up to four) offers they may receive are guaranteed as long as all of the information you’ve provided is accurate. The rates and terms shown are not just prospective situations but real prequalified offers. This is because, as Bailey explains, myAutoloan is integrated directly with each lender’s specific loan origination system.

Lease buyouts and cash-out refinance are also part of myAutoloan’s offerings. For qualified borrowers, a payment deferral of up to 90 days is possible too.

Read our full review of myAutoLoan Auto Refinance>>>

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Pros

• Offers one of the lowest starting APRs on our list
• Multiple add-ons available (e.g. GAP, Depreciation Protection, Vehicle Service Contract)
• Lease buyouts and cash-out refinance available
• No fees for processing your auto refinance loan

Cons

• Not available in Alaska, North Dakota, Rhode Island, Nevada, Massachusetts, or Washington, D.C.
• Minimum loan amount is higher than many other companies
• Must submit personal info for quote, then speak to a representative to apply

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HIGHLIGHTS

Starting APR

5.99%

Minimum Credit Score

650

Loan Amounts

$10,000 to $150,000

Loan Terms

25 to 84 months

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Why we chose it: Gravity Lending is our pick for runner-up for best for good credit because of its wealth of lenders that cater to borrowers with credit scores of 650 and up.

Gravity Lending offers a diverse marketplace of approximately 70 lenders that refinance auto loans, such as credit unions, banks, hedge firms and other financial institutions. The company handles all the necessary loan processing documentation without charging any fees. This means there’s no origination fee or additional costs from Gravity Lending during the process.

To refinance your auto loan with Gravity Lending, the vehicle can’t be over 10 years old, which is standard for auto refinance. However, the maximum mileage allowed is 100,000 — a bit lower than some other companies on our list. The suggested minimum monthly income for borrowers is $2,000. In terms of credit score, Gravity Lending works with borrowers with scores of 650 and above. (For auto refinance cash-out, the minimum FICO credit score is higher at 750.)

Overall, Gravity Lending is a solid option for anyone with fair credit or higher. The company’s average savings claim is $105 per month, and qualified borrowers may be able to defer starting payments for up to 90 days.

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Pros

• iLending handles title change and paying the previous loan
• Qualified borrowers can skip up to 90 days of payments
• High customer satisfaction on third-party review sites
• Strong average monthly savings claim of $133

Cons

• Not a fully digital experience, must work with loan consultants
• Approval time could take up to six days

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HIGHLIGHTS

Starting APR

5.49%

Minimum Credit Score

560

Loan Amounts

$7,500 to $150,000

Loan Terms

24 to 84 months

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Why we chose it: iLending takes the title of best for full service because it’s one of few auto refinance companies that handles making the necessary title changes to your vehicle and paying off your previous auto loan.

Many companies charge a document fee or origination fee for auto refinance loans. However, iLending stands out for including multiple services in that fee, like changing the title on your vehicle and paying off your previous loan. If your refinance loan is with a credit union and a membership fee is required, that’s covered as well.

The starting APR at iLending is competitive and only a soft credit pull is required to receive potential loan offers. Once you submit your information, a loan consultant will call you to discuss your needs. Depending on your financial situation, you may be able to skip up to 90 days of loan payments.

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Pros

• No restrictions on car mileage, year, make, or model
• No origination fee for loan processing
• Co-borrowers permitted
• Longer terms (up to seven years)
• No prepayment penalty

Cons

• Excellent credit required
• Hard credit check required to apply
• No cash-out refinance options
• Must have a Visa or MasterCard credit card for identity verification purposes

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HIGHLIGHTS

Starting APR

7.74% with AutoPay discount

Minimum Credit Score

660

Loan Amounts

$5,000 to $100,000

Loan Terms

36 months to 84 months

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Why we chose it: LightStream is our pick for best auto refinance for any kind of vehicle because it places no restrictions in terms of make, model, year or mileage.

LightStream is one of the few lenders with no vehicle restrictions on its auto refinance loans. There are no limitations in terms of vehicle age, make, model or mileage, so customers can refinance new, used and even classic cars. LightStream also works with other vehicles, like motorcycles and ATVs.

This flexibility is possible because LightStream offers unsecured loans. This means you’ll keep your vehicle title, unlike when purchasing a secure loan. LightStream representatives explained to Money that the company is underwriting the borrower, not the vehicle.

Lightstream’s annual percentage rates are higher compared to other companies we evaluated, and the lowest rates are available only to borrowers with excellent credit. Still, the lender’s lack of limitations on vehicle requirements is unparalleled. For those with older, high-mileage vehicles who have a high-rate auto loan, a refinance with LightStream could still mean significant savings. Use LightStream’s online rate calculator to get an idea of potential rates for your specific situation.

A bonus in working with LightStream is the lender’s commitment to social responsibility. Through its partnership with American Forest, LightStream plants a tree for every loan funded.

Read our full review of LightStream Auto Refinance>>>

A fully digital auto loan refinance experience can be a plus, but for some borrowers, some guidance goes a long way. Digital Federal Credit Union, known as DCU, offers personalized help for auto loan refinance shoppers who have little or no credit history. This can include a phone call from a representative who might suggest adding a co-borrower.

Note that the starting APR at DCU reflects enrollment in electronic payments as well as recurring direct deposits to a DCU account. An extra discount of 0.25% is available to vehicles considered energy efficient, like electric vehicles or cars with a 35 mpg average. Additionally, a 60-day deferment on the first payment is standard for any DCU auto loan refinance.

DCU also works with motorcycles, boats, RVs and ATVs, plus salvaged vehicles, though these do require an appraisal and further investigation. The credit union’s mileage maximum is 200,000, which is a bit higher than other companies — another factor we appreciate about refinancing an auto loan with DCU.

Read our full review of Digital Federal Credit Union (DCU) Auto Refinance>>>

Other Auto Refinance Companies We Considered

Caribou

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Pros

• Starting APR 5.99%
• Compare rates without a hard credit check or Social Security number
• Multitude of add-ons available (e.g. GAP, Extended Vehicle Protection)

Cons

• The $399 processing fee charged to lenders may be passed to the borrower
• Not available in Mississippi, Maryland, Nebraska, Nevada, Wisconsin or West Virginia
• No lenders offering auto lease buyouts

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Caribou is a digital platform that connects borrowers with a vast network of partner lenders — primarily credit unions and community banks — offering some of the best auto refinance loans. However, Caribou charges a document fee for its service, and there’s no guarantee the lender you ultimately work with won’t charge additional fees on top of that.

Why Caribou didn’t make the cut: Caribou’s document fee of $399 is higher compared to other companies we evaluated.

Read our full review of Caribou Auto Refinance>>>

Consumers Credit Union (CCU)

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Pros

• Detailed auto refinance calculator to check your potential savings
• CCU membership unlocks savings on other financial products, such as home loans and business loans

Cons

• Starting APR of 6.84% is slightly higher than other companies we evaluated
• No information about applicant requirements, such as minimum credit score
• No information available about loan closing fees

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Consumers Credit Union (CCU) is a direct lender for auto refinance loans. You must be a member of CCU to receive a loan, but the process is relatively easy: Pay $5 to the Consumers Cooperative Association, then open and maintain a CCU savings account ($5 minimum). However, the company hasn’t responded to our requests for an interview, so we can’t confirm important auto refinance details, such as documentation fees or credit score requirements.

Why Consumers Credit Union didn’t make the cut: Consumers Credit Union lacks transparency about its credit score requirements, loan terms and fees, so we can’t adequately compare it to other auto refinance companies.

LendingClub

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Pros

• Loan amount minimum is $4,000 (lower than most companies)
• No specific income requirement
• APR starting at 5.99%

Cons

• No add-ons
• No lenders for credit scores below low 600
• APR could be as high as 24.99%

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While its average customer has a FICO score close to 700, LendingClub has lenders in its auto refinance online marketplace that will consider borrowers with credit scores in the low 600. (These numbers were provided to Money by a LendingClub representative.)

LendingClub charges no origination fee, processing fee or down payments on its auto refinance loans. However, loans may be subject to fees from the loan lenders.

Why LendingClub didn’t make the cut: Its average monthly savings claim of $78 is lower than the companies in our top picks.

RefiJet

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Pros

• Full-spectrum credit lender
• Average monthly savings claim of $150
• APR starting at 5.29%

Cons

• Rates for bad credit borrowers are less favorable
• Full coverage insurance required
• Document fee of $498 required

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RefiJet almost made our top picks for its slightly higher-than-most maximum mileage (150,000) and low starting annual percentage rate for borrowers with excellent credit. The company offers loan options for borrowers with poor credit, too. Also, depending on creditworthiness, borrowers may be eligible to defer up to three months of payments on their refinanced loan.

Why RefiJet didn’t make the cut: RefiJet’s document fee includes paying off the previous lienholder and changing your vehicle title, but the fee ($495) is slightly higher than other companies that offer the same service.

Upstart

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Pros

• Loans starting at $9,000 with terms from 24 to 84 months
• Approval based on more factors than just credit score
• No application fee, no origination fee, no prepayment penalty

Cons

• Potential borrowers get a single best rate, so there's no opportunity to compare offers
• No cash-out refinance or lease buyouts
• No co-borrowers

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Creditworthiness at Upstart is determined not only by your FICO score, Auto Refinance General Manager Val Gui tells Money. The company’s proprietary AI also considers 1,000-plus other factors, like your savings, employment and the highest level of education you’ve completed.

Why Upstart didn’t make the cut: Because Upstart doesn’t provide a starting APR without entering personal information, we’ve decided to leave it off our top picks for now.

Auto Approve

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Pros

• APR starting at 5.24%
• Loan terms from 12 - 120 months
• Title change handled by Auto Approve
• Add-ons like GAP and 24/7 roadside assistance available

Cons

• FICO score required for lowest APR is 730 or higher
• Document fee at loan processing is $488
• Terms for low credit applicants are less favorable

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Borrowers approved for auto loan refinance through Auto Approve save an average of $148 monthly, company representatives tell Money. You’re not required to provide your Social Security number to receive a quote. Auto Approve’s minimum FICO score allows for low credit applicants; the minimum score required to apply is 580. For monthly income, the company requires a $2,000 minimum.

Why Auto Approve didn’t make the cut: The document fee of $488 is a little higher than what’s charged by other companies.

Bank of America

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Pros

• Lease buyouts for qualifying borrowers
• Refinance car loan calculator for quotes requires no personally identifying information
• Bank of America customers may qualify for Preferred Rewards discounts of 0.25% - 0.50%

Cons

• Starting APR of 7.44% is higher than other companies we evaluated
• Car must be valued at $6,000 or more
• May require a down payment for refinancing

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Bank of America offers auto refinance loans starting at $7,500, or $8,000 in Minnesota. Loan terms are 42 - 72 months. Its average monthly savings claim is $60, which is significantly lower than other companies we evaluated.

Why Bank of America didn’t make the cut: Its annual percentage rates are higher and its monthly savings claim is lower than many other companies in our top picks.

Capital One

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Pros

• 90% of prequalified applicants are ultimately approved
• Capital One handles paying off previous lienholder
• Minimum monthly income requirement is low at $1,500

Cons

• May require payment to the current loan before approval
• No lease buyouts or cash-back refinancing options
• Current loan amount capped at $50,000

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Capital One offers potential customers the opportunity to pre-qualify for an auto loan refinance with only a soft credit pull. The online application for an auto refinance loan takes only about five minutes to complete. Capital One also has an app available (called the “Auto Navigator”) for iOS and Android, through which potential customers can shop for cars and financing options.

Why Capital One didn’t make the cut: Auto refinance borrowers may be required to pay down the balance of their current car loan if their payoff amount is higher than the company’s limits. There’s also no information about starting annual percentage rates for auto refinance loans on its website.

Navy Federal Credit Union

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Pros

• Cash bonus of $200 may be available
• Competitive starting APRs: 4.54% for new vehicles, 5.44% for used vehicles

Cons

• Membership restricted to members of the armed forces, veterans, their families and household members, Department of Defense personnel
• Average savings of $62 per month is lower than other companies we evaluated
• Best annual percentage rates only available to excellent credit borrowers

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Navy Federal Credit Union offers auto refinance loans at competitive rates, especially for borrowers with excellent credit. Rates vary by mileage and model year, with lower rates for vehicle model years 2022 and newer with 30,000 miles or less. Vehicles that are more than 20 years old may be eligible for auto refinance loans, but starting APRs are significantly higher.

Why Navy Federal Credit Union didn’t make the cut: Navy Federal’s average savings claim of $62 is lower than many other companies we evaluated.

PNC Bank

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Pros

• Auto refinance loans from $5,000 to $100,000
• Check potential rates using online calculator
• Co-borrowers allowed

Cons

• Starting APR of 6.84% is slightly higher than other companies we reviewed
• PNC Bank does not handle title transfer
• Rate estimates via calculator are higher than other companies we evaluated

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PNC Bank is a regional bank that lends directly to borrowers. You can pre-qualify for an auto refinance loan with only a soft credit pull for loans from $5,000 to $100,000. Loan terms range from 12 to 84 months. While PNC Bank does not offer title transfer services for its borrowers, the lender does handle paying off the existing loan with the previous lienholder.

Why PNC Bank didn’t make the cut: Compared to other companies in our top picks, starting annual percentage rates for auto loan refinance at PNC Bank are a bit higher than average.

Auto Refinancing Guide

Refinancing can give access to better interest rates when your credit history has improved since taking out your current auto loan. However, it’s not a decision to be made lightly, as it may mean additional fees and a hit to your credit score.

• How does refinancing a car work?
• Auto refinancing pros and cons
• Auto refinancing requirements
• When can you refinance a car loan?
• How to refinance a car loan
• Documents needed to refinance your auto loan
• Does refinancing a car hurt your credit?
• How to refinance a car loan with bad credit
• Auto refinance glossary

How does refinancing a car work?

Refinancing a car works in two ways: traditional auto refinance and cash-out refinance.

Traditional auto refinance is when you replace your existing auto loan with a new car loan that has a better annual percentage rate or lower monthly payments. You pay off your previous loan using the new loan.

With a cash-out refinance, you take out a new loan to cover your original loan, but you also receive an additional amount of money that can be used for any purpose.

Traditional auto refinance

Refinancing a car generally means taking out a new loan to pay off the balance on your existing vehicle loan, ideally for a lower rate. Since your original loan is replaced by a new financial obligation, you gain a new APR and new term length.

As an added bonus, your car insurance premiums are likely to go down as well. If you’re looking to change insurers, you can also check out our list of the best car insurance companies.

Cash-out auto refinance

A few auto refinance companies also offer cash-out auto refinances, in which your new loan covers your existing balance and provides an additional amount of money. While a cash-out refinance may have lower interest rates than other options, such as personal loans or credit cards, your monthly payments will go up. This type of loan also has a higher risk of going upside-down.

Auto refinancing pros and cons

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Pros

• Longer refinancing terms decrease your monthly car payments
• Shorter refinancing terms can save you money in the long run
• May obtain lower interest rates
• No down payment necessary
• Most manufacturer warranty policies still apply after refinancing

Cons

• Total interest will go up if you extend loan repayment terms
• A shorter loan term will increase your monthly payments
• Prepayment penalties and refinancing fees can offset any interest rate savings
• Lenders may charge an origination fee on the new loan

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Auto refinancing requirements

Before beginning the process, it’s important to make sure refinancing is the right solution for you and whether you meet the qualification requirements. Carefully consider the following:

• Your existing loan’s prepayment protocol – Check your existing auto loan agreement to find out if you’ll be penalized for paying early. (This is called a prepayment penalty.) If so, crunch the numbers to see whether an auto refinance makes sense.

• Loan balance versus your car’s market value – Your loan balance is higher than the car’s market value. If you’re “underwater,” or owe more than the car is worth, many lenders won’t consider you for an auto refinance loan. (You can check your car’s value on Kelley Blue Book.)

• Vehicle age and its mileage – Auto refinance lenders have restrictions you’ll have to meet. Many won’t offer loans for cars more than 10 years old or that have over 120,000 miles.

• The status of your current loan payments – Your loan payments should be up to date. If you’re behind on payments, many lenders won’t consider you a viable candidate.

• The balance of your current loan – Each lender has a maximum and a minimum loan amount they’ll refinance. If your loan’s current balance is too low or too high, you may not qualify. Many loan providers also have minimum loan amounts (and maximums) to consider.

• The kind of car you have – Generally, auto refinance companies won’t refinance cars that are “branded,” meaning rebuilt, salvaged or commercial vehicles.

When can you refinance a car loan?

Deciding when you should refinance your loan depends on a number of factors. While a refinance is technically possible even on a new loan, there are some conditions under which it makes the most sense.

When your current deal isn’t great

Thanks to global shipping issues and high demand, and if you didn’t do some careful comparison shopping between lenders or dealerships when you bought your car, your loan may not have the best repayment terms or rates.

For instance, if your current APR is around 20-25%, you might be able to get a better offer by shopping around. This is particularly true if your loan is two years older or more, as many loans with high APRs charge most of the interest amount during that time period.

When your credit score has gone up

An improved credit score will likely give you access to much better repayment terms and lower interest rates. If your score was 640 when you received your original vehicle loan, your credit score was considered fair by FICO standards, and you likely committed to a high annual percentage rate. However, once you reach good credit (670) status or better, auto loan refinance companies may offer a better annual percentage rate and more favorable repayment terms.

When your current loan payments are too high

An auto loan refinance provides an opportunity to lower your monthly car payment. This is achieved through extending the life of your loan, which means you’ll pay more interest over the long run. But for those who need more room in their monthly budget, a drop in their car payment could be helpful.

For example, consider an original loan for $45,000 with a term length of 60 months at a 6.3% annual percentage rate. The monthly payment for this loan would be $876. If you refinance at 84 months at the same annual percentage rate, your payment drops to $664 — a savings of more than $200 monthly.

However, this longer loan term means you’ll pay more interest than you would have with the original loan. In the first scenario, the interest total is $14,175. Extending the loan term to seven years as opposed to the original five years means you’ll accrue $19,845 in interest owed — an increase of $5,670.

How to refinance a car loan

Once you’ve weighed your options and decided a refinance of your current loan is the way to go, follow these simple steps.

• Check your credit score – If you have good credit, you’ll likely get a better deal. This may be a good time to ensure there is no incorrect information in your credit report.

• Gather all the information about your current auto loan – Having all your information at hand will help speed the application process.

• Research new lenders and compare rates – While it may take some time, thoroughly researching auto loan refinance lenders and loan offers to find the best offer can not only help you compare rates, but also identify any potential red flags. You can also see whether your current lender offers a competitive auto loan refinance option, but keep in mind that some lenders will not refinance loans from their own company.

• File for prequalification – Getting a pre-approval, when available, presents you as a good candidate for a refinance.

• Submit an application – Once you’ve gathered all your documents and have chosen a lender, it’s time to apply. Many lenders offer an online application.

• Evaluate the terms – Carefully read the fine print about loan terms. Check whether you can keep your current insurance policy under the new lender’s requirements.

• Finalize the loan – Remember to keep making your payments on your existing auto loan until the new auto refinance loan is finalized.

Documents needed to refinance your auto loan

To refinance any kind of loan, some documentation is required. These pertain to personally identifiable information, income, residence and your car’s specifications, among others.

Here’s a detailed list:

☑ Social Security number
☑ Employment information
☑ Residence information
☑ Driver’s license
☑ Car registration and mileage information
☑ Proof of insurance

Does refinancing a car hurt your credit?

There’s a difference between a hard vs. soft credit inquiry, and it’s important to know which kind of credit inquiry a lender is using when you apply for an auto loan refinance. Most lenders conduct a soft pull on your credit for pre-qualification, also known as pre-approval, and this won’t affect your credit score. However, there are some lenders that conduct a hard inquiry on borrowers right away. A hard inquiry, also called a hard pull, will likely knock your credit score down a few points.

Past the preapproval process, it’s standard for lenders to conduct a hard credit pull in order to move forward with the loan underwriting process. You don’t have to commit to the loan offered at approval, though, so if you want to continue comparing offers but minimize the potential credit score drop, make sure to loan shop within a 14 to 45-day window. Credit bureaus will count these as one single pull.

Unauthorized hard inquiries aren’t unheard of, so make sure the lender is trustworthy. If you find unauthorized inquiries on your report, here’s how to remove negative items on your credit report.

After finalizing the loan, your credit score will also drop slightly because the refinance is considered new debt. However, this new account is effectively replacing an older debt, so the credit impact shouldn’t be significant. Be sure to check your credit scores across credit bureaus — see our guide to VantageScore vs FICO.

In any case, remember to keep making your payments on your current loan until the refinance has gone through. Otherwise, your credit could be affected. Also, be sure to find out if your new auto refinance lender will pay off your old loan for you or if you’ll need to handle that yourself.

How to refinance a car loan with bad credit

You must have a minimum credit score of 640 if you hope to get the best rate on an auto refinance loan. However, just like when you seek to get a car loan with bad credit, there are lenders that specialize in auto loan refinance for bad credit borrowers. Here are some cases in which refinancing may still be helpful, even if you have poor credit:

• If auto loan rates have gone down – Even with bad credit, you may still be able to find a lower rate or better loan terms if the market has improved since you purchased your original loan.

• If your goal is a lower monthly payment – If your main driver in refinancing your auto loan is decreasing your monthly payment, this may mean extending your loan term. The downside is that this will extend the life of the loan, and you’ll therefore pay more in interest as well.

If you’re determined to refinance your car loan despite a spotty credit history, follow the steps outlined above. It may make sense to check out competing offers on a marketplace website such as LendingTree or RateGenius. You may also be able to get better rates with a lender that allows you to add a co-signer to your loan.

Another option is to consider debt consolidation, which can streamline your loan payoff strategy.

Finally, if you can’t find a good deal, taking steps to fix your credit may end up being your best move in the long run. An improved credit score will affect every area of your finances, not just your auto loan refinance offers. While most credit repair strategies are possible to do yourself, if the time commitment is too high, you may want to check out our list of the best credit repair companies.

Auto Refinance Glossary

Loan-to-value – This is how much you’ve borrowed (also called the principal) that remains unpaid versus the car’s current value. Calculate LTV by dividing your unpaid loan balance by the car value, then multiply the result by 100 for a percentage.

Upside-down or Underwater – If your auto loan balance is more than your vehicle is worth, you’ve gone upside-down or underwater on your loan. Typically, auto refinance lenders will not sell refinance loans to customers who are currently upside-down on their existing car loans.

Interest rate – This is the annual cost of borrowing from a lender. It’s expressed as a percentage and added to the principal (total loan amount). Note: The interest rate is not the same as the annual percentage rate.

Annual percentage rate (APR) – This percentage reflects the total cost of borrowing from a lender. It includes the interest rate and any fees, such as origination fees, lender compensation fees (also called prepaid finance charges) and sales tax.

Debt-to-income (DTI) – DTI is how money you have available to spend, and lenders usually look for DTIs of 36% or lower. Calculate DTI by adding up monthly debt payments (e.g. rent, loan payments, insurance premiums, credit cards), then divide that number by your monthly gross income (total amount you earn before taxes), and multiply the result by 100 to get a percentage.

Lease – A car lease contract permits you to drive a vehicle for a set amount of time for a set cost, with stipulations including mileage limitations and maintenance requirements. Most car leases are acquired through dealerships, though some banks and credit unions offer facilitation services. When your lease expires, you may be able to buy the car or sign a new lease for a new vehicle.

Loan Pre-Approval – A loan pre-approval is not an official offer, but it does provide you with an estimated loan rate and terms based on a superficial review of your financial situation. If you move forward with your loan application, you’ll be asked for additional details, which will be analyzed with more scrutiny. Subsequently, your loan offer could look very different from your pre-approval offer.

Loan Approval – A loan approval requires underwriting, or the process of conducting a hard credit check and a review of your financials (e.g. income, employment history). The offer you receive via loan approval is a guaranteed offer — unlike a pre-approval, which is an estimate and not a guaranteed offer. However, you can still decline to accept a loan offer for any reason.

Cash-out refinance – Also called a cash-back loan, an auto loan cash-out refinance is similar to a mortgage cash-out refinance. For example, if your car is worth $15,000 and you still owe $8,000 on your auto loan, a cash-out auto refinance from a lender for 80% of the car’s value would mean you borrow $12,000. You use those funds to pay off the remaining balance of the original loan, and the amount you’re left with — in this case, $4,000 — can be used for any purpose.

Latest Auto Loan Refinancing News

The majority of cars on the market today cost more than $20,000, which means your monthly car payment could be a financial strain on your budget — especially if you didn’t get the best auto loan rate at purchase time. If you find yourself struggling to make your car loan payments, an auto loan refinance could be a potential avenue for savings.

Six months or more of payments to your current loan may have improved your credit score, which could mean more favorable loan terms by replacing it with a new auto loan, also known as an auto loan refinance. Even a slight reduction in your interest rate or monthly payment could be a boon to your financial situation. In fact, many auto refinance companies claim an average monthly savings of about $150.

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Auto Refinance Companies FAQs

How to refinance a car

To refinance an auto loan, shop around and compare offers from different auto refinance lenders. When you settle on the best one, submit a formal application and wait for the lender's formal offer. If accepted, you can finalize the document, settle the previous loan, and start your loan payments with the new lender.

When can I refinance my car?

You can refinance your car loan as soon as two months after closing on the original auto loan. However, if your financial situation hasn't improved or interest rates haven't changed, it's unlikely you'll see any savings. Read our tips for when to refinance a car loan to learn more.

Can I get a loan with bad credit?

You can get a car loan with bad credit, but it will be more challenging. Lenders use credit scores to evaluate a borrower's risk, so the best car refinance rates tend to go to those with good-to-excellent FICO scores (670 or higher). People with lower scores will have higher rates than those with a good or excellent credit score. Some lenders specialize in loans for customers with fair to poor credit, such as AUTOPAY and Auto Credit Express.

How many times can you refinance a car?

Legally, you can refinance a car as many times as you want if you find a different lender willing to extend you a new loan. Auto lenders may be apprehensive about refinancing if they see multiple past refinances on your vehicle and even if you get approved, there are other financial risks to consider.

Repeated refinances and loan term extensions increase the risk of going "upside-down" on your loan, which means your loan balance is greater than the market value of your car. You may also end up paying more than the original loan amount, just in interest rates.

How to transfer a car loan to another person?

You can transfer your car loan to someone else if the new lender allows it. Loan transfers may come with a transferring and/or merchant fee, and lenders always check that the transferee has good credit and income, to prevent loan defaults. The transfer won't be approved if the person's creditworthiness and income aren't up to par.

How soon can you refinance an auto loan?

Some auto refinance companies will work with auto loans as fresh as 30 days from origination. This varies by lender, though, so be sure to check the company's requirements.

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How We Chose the Best Auto Refinance Companies

To create our list of the best auto refinance companies, we’ve conducted more than 300 hours of research and vetted companies according to multiple data points. When looking for the different auto refinance companies in the industry, we:

• Compared annual percentage rates – We searched for the most competitive rates in the industry.

• Researched company offerings – Not all auto refinance companies are the same, and so we investigated each company’s offerings independently.

• Analyzed eligibility requirements – We categorized auto refinance companies based on eligibility requirements, making sure we offer options for a range of financial situations.

• Evaluated the customer experience – We reviewed each company’s complaints with the Consumer Financial Protection Bureau (CFPB), Better Business Bureau (BBB) and the Federal Trade Commission (FTC). We also studied third-party review sites for customer feedback.

• Conducted interviews with company representatives – We spoke directly with representatives from multiple auto refinance companies to confirm data and get additional details about fees, the application process and more.

• Audited financial stability – We considered each company’s financial stability to ensure the company can meet their refinancing obligations.

Although we always try to include accurate and up-to-date information on regulatory and legal actions, we don’t claim this information is complete or fully up to date. Annual percentage rates are subject to change. As always, we recommend you do your own research as well.

Summary of Money’s 10 Best Auto Refinance Companies of January 2024

• LendingTree – Best Marketplace
• RateGenius – Runner-up for Best Marketplace
• PenFed Credit Union – Best Direct Lender
• OpenRoad Lending – Best for Low Credit Scores
• Auto Credit Express – Runner-up for Best for Low Credit Scores
• myAutoloan – Best for Fair Credit
• Gravity Lending – Best for Good Credit
• iLending – Best for Full-Service Auto Refinance
• LightStream – Best for Any Kind of Vehicle
• Digital Federal Credit Union (DCU) – Best for Newcomers to Credit Building