Your Ultimate Guide to Refinancing an Auto Loan

It is fairly common for people to take out auto loans in situations that end up being less than perfect, but options are available that can protect your vehicle from being repossessed and to protect yourself from financial hardship or falling victim to a bad credit history.

 What Does it Mean to Refinance an Auto Loan?

Most car owners take out loans in order to pay for their vehicles. They then continue to make the payments faithfully until they sell the car, trade it for a new car or pay off the loan. However, just as it is possible to refinance a house by taking out a new mortgage, it is also possible to refinance a car, truck or other personal vehicle that has been purchased through an installment loan.

According to DMV.org, an authoritative online portal about vehicle laws and licensing, the concept behind refinancing an auto loan is simple. You talk to a lender and take out a new loan for the vehicle you already own. The new loan is used to pay off the original loan, thus freeing you from the original terms and obligations.

Some people refinance their auto loans with the same lender they worked with in the first place, but this is not a requirement. In fact, many lenders and finance experts believe that you will get a better deal from a new lender. On the other hand, if you already have a good relationship with your lending agent, he or she may be able to pass along some solid advice and recommendations. After all, your current lender will make the most profit when you repay the loan through the full term rather than all at once.

Where can you Refinance your Auto Loan?

Auto Loan Company
Amount of Loan
Maximum Mileage
Maximum Age of Vehicle
FICO Minimum

Inquire Now

$10,000 up to $50,000100,000 miles8 years500

Inquire Now

$10,000 up to $70,000100,000 miles9 years600

Inquire Now

$5,000 up to $100,000NoneNone680

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At least $5,000125,000 miles9 years 540

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$5,000 up to $100,000150,000 miles (may vary by term)10 years640

Inquire Now

$8,000 up to $99,000100,000 miles8 years475

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$7,500 up to $40,000None7 years540
Auto Loan Company

Amount:

$10,000 up to $50,000


Max Mileage:

100,000 miles


Max Age:

8 years

FICO Minimum:

500


Inquire Now

Amount:

$10,000 up to $70,000


Max Mileage:

100,000 miles


Max Age:

9 years

FICO Minimum:

600


Inquire Now

Amount:

$5,000 up to $100,000


Max Mileage:

None


Max Age:

None

FICO Minimum:

680


Inquire Now

Amount:

At least $5,000


Max Mileage:

125,000 miles


Max Age:

9 years

FICO Minimum:

540


Inquire Now

Amount:

$5,000 up to $100,000


Max Mileage:

150,000 miles (may vary by term)


Max Age:

10 years

FICO Minimum:

640


Inquire Now

Amount:

$8,000 up to $99,000


Max Mileage:

100,000 miles


Max Age:

8 years

FICO Minimum:

475


Inquire Now

Amount:

$7,500 up to $40,000


Max Mileage:

None


Max Age:

7 years

FICO Minimum:

540


Inquire Now

Reasons to Refinance an Auto Loan

Although you can find several great reasons for refinancing an auto loan from numerous online resources, AdvisorHQ, a prominent firm that researches and reviews banks, lenders and financial products for consumers, has put together one of the most comprehensive lists.

You have improved your credit

If your credit was average or your report had a few dings when you financed your car, you probably didn’t get the best interest rate or terms. When you refinance, this gives you a chance to show off your new credit rating to a lender who will most likely respond by giving you a better deal than you could have gotten previously.

Interest rates for car loans have fallen

While your credit rating has a lot to do with the final interest rate you are offered on a car loan, the base interest rates are a product of the prevailing economic conditions. As the markets rise and fall, so do interest rates. Take a look at the rate on your current loan, which should be on your monthly statement, and compare it to the rates being offered by some of the major banks in the country, such as Wells Fargo and Bank of America. These big lenders set the interests rates used by smaller lenders.

The full term of your loan is five years or longer

In general, the longer the term of your auto loan, the more you will pay for your car because you will be paying more interest. Five years should be considered the maximum term of an auto loan, and three or four years is ideal. In some cases, you may be able to get a lower interest rate and a shorter term.

Your financial situation has changed

In the modern economy, an individual’s financial status can change for the better or worse with little or no advance notice. If you suddenly lose your job or are forced to accept a job with lower pay, you may no longer be able to afford your current loan payments, and refinancing will help keep your car from being repossessed and protect your credit rating at the same time.

You didn’t properly research your loan before accepting it

Let’s face it. Many people get excited about buying a new car, and it is easy to get swept away in the process, especially when you are being pressured by a slick salesperson. You may have noticed later that you didn’t get the best deal, but that is no reason to stick with it. Put your new knowledge to use by negotiating a better deal through auto refinancing.

Possible Benefits of Refinancing

 

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Lower your monthly loan payments

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Lower the total amount you will pay for your car over the term of the loan

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Increase or decrease the term of your loan to match your current financial status

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Receive a lower interest rate or a fixed interest rate

More Information on Lenders

Auto Loan Company
Coverage Area
Additional Information
BBB Accreditation

Inquire Now

45 States including DC (Excluded: HI, OR, NV, ND, MS)N/AYes

Inquire Now

All 50 States
  • Credit union is part of their network
  • Yes

    Inquire Now

    All 50 States
  • Rate Beat Program Offered

  • $100 Loan Experience Guarantee Offered
  • No

    Inquire Now

    47 States(Excluded: AK, HI, LA)
  • Complete online processing

  • SSN and hard credit pull not required until acceptance
  • Yes

    Inquire Now


    All 50 States
  • Consultant availability over the phone

  • SSN and hard credit pull not required until acceptance
  • Yes

    Inquire Now

    All mainland States (Excluded: AK and HI)
  • Online processing has four offers for comparison through hard credit inquiries
  • Yes

    Inquire Now

    All mainland States (Excluded: AK and HI)
  • Online signing of contract

  • Does not offer financing for Oldsmobile, Isuzu, Saab, and Suzuki
  • Yes
    Auto Loan Company

    Coverage Area

    45 States including DC (Excluded: HI, OR, NV, ND, MS)

    BBB Accreditation

    Yes


    Inquire Now

    Coverage Area

    All 50 States

    BBB Accreditation

    Yes

    Additional Information

  • Credit union is part of their network

  • Inquire Now


    Coverage Area

    All 50 States

    BBB Accreditation

    No

    Additional Information

  • Rate Beat Program Offered

  • $100 Loan Experience Guarantee Offered

  • Inquire Now

    Coverage Area

    47 States(Excluded: AK, HI, LA)

    BBB Accreditation

    Yes

    Additional Information

  • Complete online processing

  • SSN and hard credit pull not required until acceptance

  • Inquire Now

    Coverage Area

    All 50 States

    BBB Accreditation

    Yes

    Additional Information

  • Consultant availability over the phone

  • SSN and hard credit pull not required until acceptance

  • Inquire Now

    Coverage Area

    All mainland States (Excluded: AK and HI)

    BBB Accreditation

    Yes

    Additional Information

  • Online processing has four offers for comparison through hard credit inquiries

  • Inquire Now

    Coverage Area

    All mainland States (Excluded: AK and HI)

    BBB Accreditation

    Yes

    Additional Information

  • Online signing of contract

  • Does not offer financing for Oldsmobile, Isuzu, Saab, and Suzuki

  • Inquire Now

    Obstacles to Refinancing

    NerdWallet, an informative resource on credit cards and other financing products, reports that lenders have a range of requirements for auto refinancing, and these requirements fall into the following ranges:

    • The minimum amount of a loan intended for auto refinancing ranges from $5,000 to $10,000.

    • The maximum amount of the loan can be anywhere from $40,000 to $100,000.

    • The minimum FICO credit score for refinancing ranges from 475 to 680.

    • The maximum age of the vehicle runs from seven years to unrestricted.

    • The maximum mileage for refinancing may be as low as 100,000 miles.

    Consider the Risks of Refinancing an Auto Loan

    All loans carry some inherent risk. For instance, you may want to lower your monthly payments, but in doing so, you will probably be paying more for the car overall. If your vehicle was used when you purchased it and is considered older by the current standards, it may be best to continue paying the loan you have now. This is because the car’s resale value has diminished, and the options for auto loans get slim for a car with a low value.

    Finally, always be sure to read the full loan agreement carefully before signing your name to it. While the majority of lenders are honest and try to help consumers as best they can, predatory lenders are out there, and they are ready and willing to take advantage of those who are unaware or have lowere