Best Car Loan Refinancing Companies

Car refinancing is the process of replacing your current car loan with a new one, typically through a different lender. The new lender pays off your existing loan balance, and you then begin making payments under the new terms.

Refinancing is often used to secure a lower interest rate or change the length of your repayment period to make monthly costs more manageable.

Types of auto refinancing

Auto loan refinance companies offer a variety of borrowing options, whether you’re refinancing a standard vehicle, like a car or truck or a specialized vehicle (motorcycle, RV or boat). Most auto refinancing companies will only refinance personal vehicles — commercial vehicles are typically excluded.

Each auto loan refinance company has different eligibility requirements, but many lenders look for the following:

• A solid credit history: Not all lenders will require good or excellent credit, but many will expect a credit history free from bankruptcies and serious delinquencies.
• Proof of employment or income: Lenders often require proof of stable income to ensure you can afford the new loan payments. This can be in the form of paycheck stubs, tax returns or other income documents.
• A minimum outstanding loan balance: Some auto loan refinancing companies require that you owe a certain amount of money on your current loan in order to be eligible for refinancing. This amount might be anywhere from $5,000 to $10,000, depending on the lender you choose. If you're looking for an extended term (for example, 85 to 96 months), expect some lenders to set a much higher threshold — in many cases, at least $30,000.
• A clean title: To refinance your vehicle, you need a clean title in your name. If you have a lien, the current loan must be paid off before you can refinance.
• Proof of insurance: You'll need to provide proof of auto insurance to the lender. Some lenders may also require GAP insurance, which pays the difference between what you owe on your financed vehicle and its value if it's totaled or stolen.
• Proof of residency: Some lenders may require proof of your current residence.

Some refinancing companies have higher credit score requirements than others, but may be able to refinance your car loan at a lower interest rate as a result. If you have excellent credit, make sure you take full advantage by comparing refinancing rates from multiple lenders and negotiating with your lender of choice.

Can you refinance a car with bad credit?

“Refinancing a car with poor credit is possible; however, it is extremely challenging,” Mark Beneke, owner of Westland Auto Sales in Fresno, California, told us. “Most lenders look for borrowers with good credit as they tend to pose a lower risk of default. There are some lenders out there that specialize in working with challenging credit situations but this typically comes with less favorable terms.”

If your goal for refinancing is to get a car loan with a lower interest rate, you’ll have access to better rates by improving your credit score first. If your goal for refinancing is to extend your loan term and possibly lower your monthly payments, you could refinance by working with a lender that specializes in bad credit car loans.

Applying for auto refinancing is a simple process and similar to applying for a personal loan. Once you've decided auto refinancing is a good fit for you, start by requesting free quotes from lenders; many will give you an estimate without a hard credit check.

Keep repaying your old loan until the process is complete so that you don’t incur any late fees or consequences.

1. Compare rates and terms to see which company will save you the most money. Additionally, many car loan refinance companies offer the option for co-signers, which can help you lock in a better rate if your credit score or income level is not as high as you would like.
2. Complete an application (usually online) once you choose a lender. The lender will review your application, and then you’ll receive your offer (which will include your rate, your loan terms and any fees).
3. Sign your final offer, then your new lender will pay off your old loan — and your new loan will begin.

While auto loan rates change regularly, you can check your rates by applying online or through a local car refinancing company. Some auto refinancing companies have rate calculators on their websites — you just have to enter some basic personal information, including:

• Your location
• Your current loan balance
• Your current monthly car payment
• Your current interest rate
• Your desired refinance amount
• Your desired loan term
• Your desired interest rate

When you receive an auto refinancing quote, check to see how long the company locks in the interest rate. Some auto loan refinancing companies lock in rates for just 30 days, while others may lock rates for up to 60 days.

Average auto loan refinancing rates by credit score

When you shop for the best car loan refinancing offer, your credit score remains the single biggest predictor of the APR a lender will quote. Current rate-tracking shows:

• Borrowers with scores above 760 typically receive sub-6% refinance offers on five- to six-year terms
• Those in the 700–759 band hover in the mid-6% range
• For a score in the mid-600s, average APRs climb toward 9%
• Applicants below 620 often face double-digit rates or may find that only a handful of lenders will approve them

How to get the best auto refinance rate

• Improve your credit score
• Shop around to find the best rates and terms
• Opt for a loan term that balances monthly payments and overall interest costs
• Avoid prepayment penalties
• Apply with a co-signer if your credit isn’t great to get a better rate

Many borrowers who’ve left reviews on ConsumerAffairs have been happy with their decision to refinance. “I've never refinanced anything in my life so I was scared going in but I knew what I wanted,” a reviewer on our site, Therese from Florida, said. “They got me huge savings for my monthly. I got years shaved off of my loan and my APR went from 13% to 6%.”

In the past two years, nearly 90% of mentions of the service/loan process of car loan refinancing in reviews are positive.

Auto refinancing might be the best option for you if:

• Your credit score has gone up: If your credit score was less than ideal when you applied for a car loan, you might be facing high interest rates. Once you’ve put in the work to raise your credit score by making on-time payments on your current loan, refinancing could give you a shot at a car loan with a better interest rate.
• Interest rates on car loans have dropped: Maybe you had to purchase a car when interest rates weren’t at their lowest. If you can secure a lower interest rate than what you currently have, refinancing could potentially save you a significant amount of money over the life of your loan.
• You’re struggling to make your monthly car payments: In addition to a lower interest rate, refinancing can also be a way to extend your loan term and lower your monthly payments. If your payments have become too much of a burden, look into extending your loan term by refinancing.

» LEARN: Personal loans vs. auto loans

Pros and cons of auto refinancing

When not to refinance your car loan

If you’d rack up significantly more debt by refinancing, it might not be a good move. While refinancing your car can help you secure a lower interest rate and monthly car payment, you could end up paying more over the life of the loan.

“If you truly cannot make ends meet because a payment is too high and refinancing will allow you to have enough money to get through the month without going into further debt, then refinancing is a great option,” according to Mark Beneke, owner of Westland Auto Sales in Fresno, California.

“However, in our experience, refinancing a vehicle will typically only ‘free up’ under $100 per month and there are better ways to truly save $100,” Beneke said.

If you’re using auto refinancing to access funds, there are other options available, such as a personal loan or refinancing your home. However, if you’re looking into refinancing your car because you can’t afford the monthly payment, the following alternatives can help.

• Sell your car and lease instead: This option depends on your current vehicle and how much it would sell for, but leasing often comes with lower monthly payments than car loans require. With a lease, you're only paying for the car's depreciation during the lease term rather than the full value of the car.
• Consider downsizing to a less expensive car: Again, this option depends on how much your current car is worth, but if you own an expensive or larger vehicle than you need, downsizing to an older, smaller model could help you save money.
• Debt consolidation loan: While you won’t be able to roll your auto loan into a debt consolidation loan, you can use it to help you manage other debts. For example, if you’re balancing several credit card bills, rolling them into one manageable personal loan can help you have more funds for your car payment.
• Credit counseling: If you're struggling with your auto loan because of broader financial issues, consider seeking advice from a credit counseling agency. Many credit counseling companies offer free consultations and budgeting advice.