An auto refinance involves taking out a new loan to pay off the balance of your existing car loan. Refinancing your car loan could help you snag a lower interest rate, reduce your monthly payment or get access to some much-needed cash.
We’ve analyzed some of the best auto refinance loans for a range of credit profiles — with features such as competitive starting interest rates, a range of loan amounts and the ability to get cash back — to help you find one that could be right for your situation.
- Best for people who need help with the refinance process: RateGenius and RefiJet
- Best for people with bad credit: iLending
- Best for low starting interest rates: PenFed and Caribou
- Best for people who want a cash-out option: Auto Credit Express and Autopay
- Best for people with a low car loan balance: Consumers Credit Union
Best for people who need help with the refinance process: RateGenius and RefiJet
Why RateGenius and RefiJet stand out: Both RateGenius and RefiJet streamline the auto-refinancing process by handling the paperwork, title transfer and current loan payoff.
Here are some more details about RateGenius.
- Lending platform — RateGenius is an online platform that partners with more than 150 lenders to provide refinance offers to people who qualify for a loan.
- Range of credit histories considered — Lenders in the RateGenius network consider applicants with less-than-perfect credit, though interest rates could be significantly higher than someone with good or excellent credit would get.
Read reviews of RateGenius.
Here are some more details about RefiJet.
- National network — RefiJet connects people with a national network of financial institutions, giving you a chance to receive loan offers from multiple lenders.
- Refinances more than just cars — Lenders in the RefiJet network provide refinance loans for cars, motorcycles and other personal-use vehicles.
- Not everyone can apply for prequalification — To apply for prequalification, you must be employed or have a steady source of income. You’ll also need to have a history of on-time auto loan payments, a vehicle that’s no more than 10 years old and full-coverage auto insurance.
Best for people with bad credit: iLending
Why iLending stands out: Auto loan marketplace iLending works with a range of lenders to provide options for auto loan refinancing — and the company says that it will find loans for people who don’t have a great credit history.
Here are some more details about iLending.
- Refinance older cars — iILending says it can help you find refinancing options even if you have an older vehicle.
- Discuss loan options before applying — You can work with an iLending consultant to see what your refinancing options are before submitting a formal application, which includes a credit check.
Best for low starting interest rates: PenFed and Caribou
Why PenFed and Caribou stand out: For people with excellent credit who qualify, PenFed and Caribou both offer low starting interest rates that are close to — or even lower than — the starting rates that some lenders offer on new-car loans.
Here are some more details about PenFed Credit Union.
- Membership required — You must be a member to qualify for an auto loan from PenFed Credit Union. Joining is easy, and you don’t necessarily have to be a member of the military.
- High loan limit — PenFed Credit Union offers auto refinance loans in amounts up to $150,000.
- Doesn’t refinance its own loans — If you got your current car loan from PenFed Credit Union, it won’t refinance your loan. The lender only refinances auto loans from other lenders.
Read PenFed Credit Union auto loan reviews to learn more.
Here are some more details about Caribou.
- Lender network — Caribou partners with multiple lenders, so you could receive more than one offer with a single application if you prequalify.
- Refinancing fee — Caribou charges its lenders a $499 processing fee on each loan. Your lender may include that fee in your new loan amount.
For more info, check out reviews of Caribou.
Best for people who want a cash-out option: Autopay
Why Autopay stands out: Not all lenders offer cash-out refinancing, but Autopay offers cash-out options for qualified applicants. But before you apply for this type of loan, consider the risks.
Getting cash back will likely increase the amount you have to repay, which can make it difficult for you to keep up with your payments. And if you default on your loan, the lender may repossess your vehicle. Plus, when you get cash back, your loan-to-value ratio increases. This means you might end up owing more than the vehicle is worth, making it difficult to sell or trade in.
Here are some more details about Autopay.
- Range of loans — Lenders in Autopay’s network offer traditional, cash back and lease buyout refinancing to qualified applicants.
- Large loan range — Loans through Autopay’s lender network range from $2,500 to $100,000 — though a lender may offer different terms on Credit Karma.
- All credit considered — Lenders in Autopay’s network consider people across the credit spectrum.
Read reviews of Autopay to learn more.
Best for people with a low car loan balance: Consumers Credit Union
Why Consumers Credit Union stands out: The minimum balance to apply for a refinance with Consumers Credit Union is $250, so this lender is a good option if you want to refinance a car loan with a lower balance.
Here are some more details about Consumers Credit Union.
- Must join to apply — Membership in Consumers Credit Union is open to anybody. To become a member, you must join Consumers Cooperative Association and pay a one-time $5 membership fee. Once you do this, you can apply for a refinance.
- Autopay discount — If you set up automatic payments for you loan, you can get a 0.25% interest rate discount.
- Loan calculator — The Consumers Credit Union website has an auto refinance calculator that can help you see you how much money you could save by refinancing your loan.
Who has the best auto refinance rates?
Here are some lenders with low starting refinance rates.
| Lender/Lending platform | Lowest APR for refinance (as of Nov. 3, 2024) |
|---|---|
| Caribou | 5.48% |
| PenFed Credit Union | 5.24% (model year 2023 or newer and less than 7,501 miles) 6.19% (preowned vehicles with more than 7,501 miles) |
| Consumers Credit Union | 5.49% (model 2022 or newer) 6.18% (model 2018 to 2021) |
| iLending | 5.49% |
How we picked these lenders
We selected these lenders based on factors that may be important to people who want to refinance their auto loan, such as …
- Competitive rates
- Range of refinance loan types and amounts
- Whether the lender considers a range of credit profiles
- Ability to apply for prequalification to see estimated rates and loan terms without affecting credit scores
- Other perks, like step-by-step guidance throughout the refinancing process
How does auto loan refinancing work?
When you refinance your car loan, you replace your current loan with a new one. The new auto loan will have a new loan term and annual percentage rate. Many banks, credit unions and online lenders offer refinance loans — and the process for getting a refinance loan is similar to getting a loan for a car purchase.
Once you shop around, compare refinance loan offers and determine the best deal for you, you’ll need to complete a loan application. If your loan is approved, you can then pay off your original car loan and transfer your title to your new lender. (Your new lender may do one or both of these things for you.)
What to consider with auto refinance loans
Whether you should refinance your auto loan depends on a range of factors, including whether your credit health has improved since you took out your current auto loan.
If your current monthly payment doesn’t fit into your budget, watch out for lenders that reduce your car payments by extending the length of your loan instead of offering a lower rate. With a longer term and the same interest rate, you may have lower monthly payments, but you’ll end up paying more in interest over the life of your loan. Plus, a longer loan term increases the odds that you’ll become upside down on your loan.
As with any loan, be sure to shop around and compare loan offers to find a loan with better terms that fit your financial goals and budget.
When should you refinance your car loan?
Whether refinancing your car is right for you depends on your financial circumstances and goals. You may want to give it some thought if your credit, finances or interest rates have recently improved.
Lenders look at a number of factors when determining your loan rate and terms. These may include your credit history, credit scores and debt-to-income ratio — your monthly debt payments compared to your monthly income. If your credit has improved or you’ve reduced your debt since you got your original car loan, you may be able to get a better interest rate with a refinance loan.
Even if your credit was good to begin with, you may not have gotten the best rate possible on your original loan if you didn’t shop around or you got your car from a dealership. Dealers may mark up interest rates in exchange for arranging your financing.
Auto refinancing may also make sense if interest rates have dropped since you took out your current loan. Interest rates can change regularly, and even a drop of 2 or 3 percentage points could result in substantial savings over the life of your loan.
Lastly, a refinance may help if you’re struggling to make your car payment each month. Getting a refinance loan with a longer loan term could help reduce your monthly payments. Just remember that an extended repayment period could mean you end up paying more in total interest on the loan.
FAQ: Editors’ answers
You may want to hold off on refinancing your car if you’ve already paid off most of your current auto loan, your car is an older model or if the fees will be hefty.
If you’ve paid off most of your current loan — Interest is often front-loaded, which means that more of your car payment goes toward interest early on and more goes to principal toward the end of the loan term. If you refinance at the end of your loan, you may not be able to save much in interest.
If your car is older or has a lot of mileage — You may have trouble qualifying for a refinance loan if your vehicle is an older model or has a lot of miles on the odometer. Many lenders won’t refinance cars with more than 75,000 to 125,000 miles on them or that are older than five to 10 model years.
If you’ll incur a lot of fees — You may want to forego refinancing if the fees outweigh the benefits. Check to see if your current loan has a prepayment penalty. That fee — combined with any refinance fees such as processing, titling and state re-registration fees — can make a refinance more expensive and may cancel out any savings you would have seen with the refinance. Make sure paying these fees would still make sense for you before proceeding with a refinance.
Refinancing a car may come with some costs. If your current lender charges a prepayment penalty fee for paying off your loan early, you’ll be on the hook for that expense.
Some lenders may also charge fees for services such as processing paperwork or handling title transfers. If your lender doesn’t handle the title transfer, you’ll need to take care of that yourself and pay any associated fees. Title transfer fees vary by state, so check with your state transportation agency to see how much a transfer costs where you live. Depending on the state, you may have to pay re-registration fees for your car. These fees also vary by state.
Some lenders may also charge application or origination fees. Make sure you ask any lenders you’re considering what fees they charge and whether they’re included in your loan amount.
It depends on your lender. Some lenders will refinance auto loans they issued, while others won’t. If you’re considering an auto refinance, check with your current lender first to see if it will refinance its own car loans and at competitive terms.
An auto refinance can temporarily lower your credit scores in a couple ways.
Hard credit check — When you apply for a refinance loan, lenders will perform a hard inquiry to check your credit history and scores. A hard inquiry can cause a slight drop in your credit scores. If you’re shopping around for a refinance loan and applying with multiple lenders, be sure to submit your applications within a 14-day period. While the time frame can differ, many credit-scoring models consider multiple inquiries within a 14-day window as just one inquiry, which will minimize the impact on your credit scores.
Account closing — After you refinance, your original car loan will be closed. This can affect your credit scores because credit-scoring models consider the length of the accounts on your credit reports.
New credit — If you’ve recently applied for and taken out other loans or credit, your credit scores could take a hit. Credit-scoring models consider several new accounts within a short time period to suggest a greater risk.
While these factors can lower your credit scores, an auto refinance could help improve your credit in the long run if you make consistent, on-time payments on your new car loan. Your payment history is the biggest factor in calculating your credit scores.