Refinance Car Loan: Best Offers & How to Apply

Refinance Car Loan

Auto loan refinancing is not compulsory, and you can do without it. However, you should pay attention to the perk of a lower interest rate, lower monthly payments, and faster loan servicing.

That is especially true if you want to get the best deal on your vehicle loan.

Refinancing auto loans means paying off the old cash advance with a new one. Usually, the new loan will have better rates and a lower monthly payment than the former to make it worthwhile. As you will see in this article, lowering the pressure of a car loan can be prudent.

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Auto Refinance Loans: Best Offers

It is one thing to refinance an auto loan, and another to find the best deals that suit you. You should take your time with this, despite the lure of lower rates and better terms. You must take great care in selecting the best auto refinance lenders for your existing auto loan.

Fortunately, we have chosen the best lenders you can find for auto refinancing. We will explore them further to give you more information and help you decide. The best auto refinance lenders are as follows:

U.S. Bank

U.S. Bank Autoloan

This option is best for those with U.S. Bank personal checking or savings accounts. It offers a robust repayment plan, but it comes with some caveats.

The U.S. Bank is one of the most prominent financial institutions in the country. It also offers a versatile online process for all its services. Business Insider Intelligence rates its mobile app as the best for customer service.

The minimum credit score required to refinance your vehicle with the U.S. Bank is 800. Also, it only offers a minimum loan amount of $30,000 with an interest rate of 7.79%. You can qualify for a better rate by meeting its requirements.

The U.S. Bank requires a high credit score. You might need a credit union if you want something lower than 800.

Capital One

Capital One Auto Refinancing

Capital One is best for zero prepayment charges. You can refinance a car loan and pay off the amount at any time without any fees.

This bank is the sixth largest, with over 20 years in the financial sector. It brings ingenuity and innovation to banking for its clients. Today, you can complete the entire auto refinancing process on the web.

Capital One only lists its rates once you provide your credit score. That will determine what you get, but note that you might need up to 670 to be eligible. To refinance a car loan, you can get anywhere from $7,500 to $75,000 in cash.

The requirements include proof of employment and income. Also, your current lender must report your loan to credible credit bureaus.

RefiJet

Refijet

RefiJet is best for those looking for a pause in loan repayment. The company offers up to two months without any monthly payment.

This company started in 2016, immediately offering nationwide virtual refinancing for existing auto loans. It has a custom application process that will get you funded with a lower monthly payment.

You can get an interest rate of as little as 3.99%, but you must have a credit score of 500 to qualify. The minimum loan amount is $5,000, while the maximum is $100,000.

RefiJet offers several perks for those who want to refinance their auto loans. They can get lower rates, change loan terms, buy out the lease, add or remove a co-borrower, etc. As a result, this company is one of the best loan options available.

Caribou

Caribou

Caribou is best for finding the most competitive rates in minutes. The company partners with some of the best lenders in the country to give you the best options to refinance your auto loan. Although it offers its services from Washington, DC, it is available online.

This company has stellar offers with discounts for the monthly payment amount. It promises to help its clients save over $110 on their monthly car payments.

You can get interest rates as low as 2.92% with Caribou. The minimum credit score required to qualify is 620, ranging from $10,000 to $60,000.

Caribou offers several services that make it easier to refinance your auto loan. However, the high credit score requirement might be limiting.

Consumers Credit Union (CCU)

Consumers Credit Union

The Consumers Credit Union is best for those who want a longer loan term. It allows repayment for up to 98 months.

This financial institution, like the Penfed Credit Union, offers a full-fledged online service. Also, you can visit their physical locations to get more in-person service.

The loan rate starts at 6.44% and can get up to 8.54%, depending on your car and the repayment period. To get a loan from Consumers Credit Union, you must have a good credit score of at least 670.

This loan option is good, but its high credit history requirement makes it unfavorable for bad-credit borrowers. Also, it only accepts cars that are at most seven years old.

LightStream

LightStream Auto Loan

LigthStream is best for refinancing a car loan with mileage restrictions. The company offers competitive rates, although the credit score might hinder some.

Dealing with LightStream is simple and quick because it provides a versatile online platform. The company belongs to Truist and serves customers with excellent credit scores. You can apply on their online platform with your smartphone.

The minimum rate you will get is 6.49%, but you will need a minimum credit score of at least 660. LightStream offers between $5,000 and $100,000 with repayment periods of as much as 84 months.

This company offers a swift application process through its website. However, the high minimum credit score might not favor most people.

Navy Federal Credit Union (NFCU)

Navy Federal Credit Union

This option is best if you want to refinance your auto loan with a credit union. It offers competitive rates, even for used vehicles. Also, you can get a 96-month repayment period for a new car.

The Navy Federal Credit Union offers business solutions and other financial services. Its branches are spread across the country for easy accessibility. On the other hand, you can conduct your business on its online platform.

Interest rates for car refinancing start at 4.54%. That figure can rise to 7.85% if you opt for the 96-month repayment period. The loan amount is subject to the condition of your car, but you can get a $200 discount.

Bank of America

Bank of America

The Bank of America is a vast financial institution that is best for getting direct lending. It even has a loan calculator to help you determine your best terms.

You can switch to the online app because Bank of America offers a complete online banking platform. It has many subsidiaries that provide specialized services across the country.

The auto refinance rates start at 6.19%, depending on your state. You might get a lower or higher rate based on that. Furthermore, your credit score will significantly impact your monthly payment amount.

This financial institution has some great discounts for its members. That might reduce the interest and make the cash advance conditions more flexible.

What Is Auto Loan Refinancing?

Auto refinancing entails getting a new vehicle cash advance to pay off the old one. You will still service the new one, but you will also be able to save money because of the lower interest rates. That will take you to a refinance lender for a new loan term and monthly car payment agreement.

Taking out a vehicle cash advance is okay, but the repayment plans, including the monthly payments, could get burdensome. Refinancing the original auto loan with a good credit score is your best option for getting a lower monthly car payment.

How Auto Loan Refinancing Works

There is no significant difference between refinancing your auto loan and getting a vehicle loan. The refinance lender pays off your current cash advance while you start paying off the new one.

That said, people opt for auto refinance because of the lower interest rates. It brings more flexible loan terms and a lower monthly payment. Still, how much value or savings you get depends on your credit score and the loan balance.

An excellent credit score will fetch better auto loan refinance rates from the new lender. We will see more on that in subsequent sections.

Should I Apply for Car Loan Refinancing?

Refinancing would be prudent if you had dealer financing for your current auto loan. The car payment will be much easier with the lower annual percentage rate from the new lender. You will also save more money than you would if you continued with the existing cash advance.

Also, you can get an auto refi loan if you got your credit score improved. That will give you better interest rates for the new loan funding. Also, the new rates will make car payments easier than under the original loan terms.

Another primary reason to refinance your car loan is if you cannot keep up with the payments. You will get lower and more flexible rates for the new auto loan if you have a good credit history.

What Do I Need for the Auto Loan Refinancing Approval Process?

If you have taken a refinance loan from multiple lenders, you will not qualify for better auto loan rates. That said, you will need a few things to apply for or prequalify for auto refinancing. Credit unions may be more flexible with the requirements than private lenders.

Some lenders may require a copy of the original loan contract. You can always contact the existing cash advance provider to get it if you have lost it. 

The relevant documents to refinance an existing auto loan include the following:

  • Driver’s license
  • Proof of insurance
  • Proof of income
  • Social Security number

Some lenders will conduct a hard credit inquiry for the cash advance approval process. Nevertheless, you can get a soft credit inquiry during prequalification.

Is Refinancing My Auto Loan Worth It?

Interest rates are frequently frustrating, particularly when they result in high monthly payments. In such cases, refinancing your current auto loan may be your only option. Getting an auto loan refinance might be a bad idea.

The most obvious reason to refinance an auto loan is to get a lower interest rate. That will trickle down to the monthly payment and help you save money throughout the remaining loan term. Nevertheless, other things are worth considering before refinancing your current vehicle loan.

You must consider where you are in the cash advance period and your credit score. A poor credit score will do very little for your car loan refinancing. Also, finding a new loan to pay off the current lender will be challenging.

Can I Refinance a Car Loan with Bad Credit?

Getting an auto loan refinance is easy if you do it right. It goes beyond just looking for a way to pay off your current auto loans faster. That said, bad credit or a poor credit score will hamper your chances of refinancing your auto loan.

You will get unfavorable rates or outright disqualification with a bad credit score. Nevertheless, some auto refinance lenders don’t mind a poor credit report. You might not even need it for others, as they will not mind paying off your existing vehicle cash advances.

The Process of Applying for an Auto Refinance Loan

The following are the steps to refinance your car loan:

  • Decide if refinancing is best for you:Despite the attractive rates and flexible loan terms, refinancing your auto loan is only ideal in some situations. A while back, we mentioned a few instances where an auto refinance would serve you poorly.
  • Review your current loan: While reviewing your recent cash advance, note the interest rates, loan amount, and your point in the loan period. They might lower your loan options for an auto refinance.
  • Determine the value of your car: Know your car’s worth before you head out for an auto refinance.
  • Shop around: Nothing will replace you, making an effort to find the best deals. Hence, compare the interest rate of multiple lenders before making your pick.
  • Sign off on the new deal.

What to Look for When Refinancing an Auto Loan

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When shopping around for an auto refinance loan, there are things worth keeping in mind. They mostly come from lenders. Hence, reviewing them against your current loan term is crucial.

Most auto loans come with terms and conditions, including interest rates, prepayment penalties, etc. You must carefully consider them to make an adequate comparison with the auto refinance. Also, there are vital factors for the new auto loan.

With that in mind, the following are things you should consider when taking out an auto loan refinance for your vehicle:

Interest Rate

The interest rate should be the first consideration if you want to refinance your auto loan. It determines the monthly payment amount and the overall strain on your finances. You can use the auto loan refinance calculator to see how it will affect your monthly payment.

The interest rate is what the lender charges you for the cash advance. Look for ways to improve your credit score, which will help you get a lower monthly payment amount.

Always remember that an excellent credit score will get you a reasonable rate.

Loan Term

The loan term represents the time the lender gives you to repay the auto refinance. It could be anywhere from a few months to a few years, depending on the amount involved. The key is to bargain or extend the term of your refinance loan.

Longer terms may result in lower rates, but that is only sometimes ideal. Avoid shorter ones if you do not have the financial capacity to match them. The term should be your primary concern when getting an auto refinance.

Discounts

Some refinance loan lenders may offer discounts to help you save money. It could be a first-time welcome package or just a periodic promotion. The key is to cash in if you find the discounts helpful to repaying your refinance loan.

Finding lenders with significant and worthwhile discounts will take a bit of shopping. Also, good credit scores might qualify you for exciting discounts that will make your car loan refinancing easier. They might help make your monthly payment less strenuous on your finances.

Fees and Penalties

You might get a prepayment penalty if you repay your refinance loan early. Other charges could be in the form of an origination fee or a charge for missing a monthly repayment. Fees and fines are lender-dependent.

Before settling on a refinance loan lender, you must review all the fees and penalties. They could easily bump up the cost of the auto loans and make them unfavorable to you. Often, you will get all these details when applying to a particular lender.

Advantages and Disadvantages of Auto Refinance Loan

Auto refinancing has its good sides and some significant disadvantages. It is the same as taking out auto loans for a new or used vehicle. You must weigh both sides of the coin to ensure you have the most effortless car payment possible.

Advantages of refinancing your current cash advance

The following are the advantages of refinancing your car loan:

  • Better interest rates: There is no need to allow your good credit scores to waste away when you can get a better interest rate. With more Gen Zs and millennials defaulting on their vehicle cash advances, you want to grab every opportunity you have. Then, it becomes imperative to refinance your car loan.
  • Lower monthly payment: Lower rates will always result in lower repayment amounts. Hence, you can finance the automatic payments without worrying.

Disadvantages of refinancing your auto loan

Note the following when opting to refinance your car cash advance:

  • Owing more than the car's worth: Auto refinancing could result in you owing more than the car's worth.
  • Added fees and penalties:The fees and extra charges when you refinance your auto loan could outweigh your last car payment.

FAQ

Can I refinance if I owe more than my car is worth?

You can get refinancing even when your car’s worth has fallen below the value of the funding. Lenders prefer to avoid these situations by refusing to pay for old vehicles. They might even use the mileage as an essential requirement to approve your request. Some can go as far as seven years, while others can go for more.

Can I refinance my current auto loan with my existing lender?

Most lenders will not refinance an existing loan or vehicle cash advance you got from them months or years ago. That also holds for all their subsidiaries, if they have any. As a result, you should seek approval from a different lender or financial institution. Avoid having multiple lenders during this time.

Is it easy to refinance an auto loan?

You can refinance your vehicle without visiting any physical offices. Several lenders are available online to give you bespoke services and approve your request. Hence, you can apply from your smartphone or PC and enjoy the seamless process. You must have a good credit rating, and your car must meet the lender's requirements.

Can I refinance a car at the same bank?

Most banks or financial institutions will gladly refinance your cash advance with another lender. They would not approve your request if your first cash advance came from them or their subsidiaries. Also, having multiple lenders will lower your chances of getting a new request approved with favorable rates.

Is it bad to refinance my car?

There is nothing wrong with refinancing your car if you deem it necessary. Some advantages include better refinance rates, lower monthly payments, and the option to extend the repayment period. However, you must consider if the cost of refinancing will outweigh the vehicle's worth when you are done with the repayment.

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