You financed through a dealership. Financing through a dealer may mean that you have a higher interest rate than you might with a different lender. If you didn’t get an auto loan preapproval from a lender, you might be paying more in interest than needed and might benefit from refinancing.
Your credit score or income improved. If your credit score has improved significantly since you took out your auto loan, you may be able to qualify for a lower refinance rate. If your income grew because of a new job or promotion, this may be true as well.
You need a lower monthly payment. If you’re struggling to make your current monthly payment, you might consider refinancing. By extending the term of your loan, you can often lower your monthly payment at the expense of paying more interest over the total term of your loan. It’s better to refinance your auto loan for a lower monthly payment than it is to miss payments, pay late fees or face repossession.
Interest rates have dropped. If interest rates have dropped significantly since you got your car loan, it may be worth it to refinance. Just be sure that the amount you save each month makes it worth the cost of any one-time fees you’re charged during the refinance process.
You found a cosigner. If you have a trusted friend or family member who can cosign your auto loan, you may consider refinancing. Adding a cosigner with better credit and more income will likely improve the rate on your auto loan.
Terms: Auto loan refinance terms often include 36-month and 60-month auto loans, but they can range from 24 to 84 months depending on the lender and your situation. A longer term usually means a lower monthly payment, but you’ll pay more in interest over the life of your loan.
Amounts: Maximum and minimum auto loan refinance amounts can vary greatly depending on the lender. Navy Federal Credit Union, for example, has a minimum auto loan balance requirement of only $250 and no maximum.
Rates: Refinance auto loan rates are higher than new-car rates and more similar to used-car rates because you are, in fact, financing a used car. Your exact rate will depend on your credit and income. Here are average auto loan APRs by credit score that borrowers obtained through LendingTree’s platform in November 2022:
| Credit score | Average APR |
|---|---|
| 720 or higher | 5.50% |
| 680-719 | 6.58% |
| 660-679 | 7.33% |
| 640-659 | 7.76% |
| 620-639 | 8.63% |
| 580-619 | 9.13% |
| 560-579 | 11.35% |
| Less than 560 | 13.70% |
Gather key information. So that you’re not running around the house looking for paperwork before the online application signs you out, gather the paperwork beforehand. You may need to know the following information:
Apply to lenders. Applying to multiple lenders in a 14-day window only counts as one inquiry on your credit report. We recommend applying to a few at a time so you stay within the window and can compare the offers together. You could fill out an online form at LendingTree and get up to five auto refinance loan offers from lenders, depending on your creditworthiness. Potential lenders could be credit unions, banks and online financers.
Choose the best offer. Once you have multiple offers in hand, it’s time to compare apples to apples. Look at the monthly payment and APR with each loan and consider which is the cheapest and most convenient for you. To reject an offer, you don’t have to do anything. Many auto loan offers expire within 30 days. To accept an offer, contact the lender to be walked through the rest of the process.
If you’re considering an auto loan refinance, use LendingTree’s auto refinance calculator to see how you might lower your payment or save money each month.
Refinancing may be worth it if you find that a refinance would significantly lower your monthly payments. This could be either due to lowering your interest rate, extending the term of your loan or both. Freeing up money in your budget each month can give you peace of mind.
Refinancing may not be worth it if it wouldn’t save you very much money each month. If your remaining balance is not very high or your interest rate won’t drop significantly, you might find that refinancing your car loan won’t make enough of a difference to be worth the time it would take.