Where to refinance an auto loan
Portions of this article were drafted using an in-house natural language generation platform. The article was reviewed, fact-checked and edited by our editorial staff.
Key takeaways
Different lender types have varying requirements for loan approval. Credit unions and online lenders, for example, can be more flexible.
Borrowers with good to excellent credit will likely qualify for the best rates.
Before refinancing, compare rates and terms and use an auto refinance calculator to determine the potential cost of the loan.
Refinancing your auto loan can be a smart financial move. Drivers who refinanced in 2022 saved an average of $65 monthly, according to TransUnion. By replacing your existing auto loan with a new one, you can save on the total cost of your car, but this is only if you get a better rate and term.
Since auto loan refinancing rates vary by lender, when searching for the best place to refinance your car loan, be sure to compare your current lender’s rates and terms to others. To find the best rates, look beyond banks and see what other lender types have to offer.
Lender type | Best for |
|---|---|
Banks | Borrowers with good to excellent credit who want access to the lowest rates available. |
Credit unions | Borrowers who want low interest rates and have an established account or membership with the credit union. |
Online lenders | Borrowers who want convenience and may not qualify for refinancing through a bank or credit union due to their imperfect credit score. |
Banks
Anyone can apply for auto loan refinancing with a bank. If your current auto loan is with a bank, you’re likely familiar with its lending requirements, fees, customer service and more. If you’ve improved your credit score, you might be able to refinance with your current lender for a better rate.
Compared to other lenders, banks have strict requirements, but they offer low, competitive rates.
Bank auto refinancing pros
Competitive interest rates: A high credit score gives you lower, competitive rates.
Physical branch locations: Staffed branch locations offer borrowers in-person assistance with their loans.
Online and in-person application process: Some banks offer both options, plus the option to apply over the phone. Others require an in-person visit.
Bank auto refinancing cons
Strict eligibility requirements: Banks often require a higher minimum credit score and lower debt-to-income ratio than other lenders.
Who it’s best for
Bank auto loan refinancing is best for borrowers with good to excellent credit who want access to the lowest rates available. It’s also better for borrowers who want in-person customer service.
Credit unions
These not-for-profit financial institutions are owned by their members, who enjoy reduced fees and low interest rates. With this option, you must be a member and meet the lending requirements to be approved for auto loan refinancing.
Credit union auto refinancing pros
Online and in-person application process: Depending on the credit union, you may be able to complete the application process online or in person.
Low interest rates: Credit unions offer low interest rates on loans because they’re less concerned with maximizing profits.
In-person support: Physical branch locations with loan officers who can provide in-person support.
Credit union auto refinancing cons
Requires established relationships: Products and services are only available to members.
Who it’s best for
Auto loan refinancing through a credit union is a good fit for borrowers who have an established relationship or membership with the institution.
Online auto refinance lenders
Online auto refinance lenders allow borrowers to apply for auto loan refinancing in just a few minutes since the application process is entirely online. Rates tend to be high, but there’s a good chance you’ll qualify for a loan because the lending requirements are a little more flexible than what you’ll find at banks and credit unions.
Online auto refinancing pros
Online application: Applications are only available online, so the process is fast and convenient.
Flexible lending requirements: Flexible lending requirements make it easier for borrowers to qualify.
Fast funding: Online lenders often provide fast funding. For example, LightStream offers same-day funding to approved borrowers.
Online auto refinancing cons
High interest rates: Interest rates for auto loan refinancing with an online lender are higher than what’s offered by banks and credit unions.
Support is not available in person: Online lenders operate solely online, so in-person support is not available.
Who it’s best for
Online auto loan refinancing is best for borrowers who may not qualify for refinancing through a bank or credit union due to their imperfect credit score. It’s also best for people who want the convenience of a fully online experience.
What’s the best place to get a car loan?
As you compare lenders to find the best place to refinance a car loan, consider your credit score, auto loan refinancing requirements and the potential cost of the loan.
Your credit score: Check your credit score so you can quickly narrow down which lenders are not an option.
Auto loan refinancing requirements: Review each lender’s loan requirements, including vehicle mileage, remaining loan balance and minimum loan amount. Make sure you meet the requirements before applying.
Potential cost of the loan: Review each lender’s repayment terms and determine the potential cost of your loan using an auto refinance calculator so you can compare it to your existing loan.
The bottom line
Auto loan refinancing isn’t right for everyone. Whether you choose a bank, credit union or online lender, refinancing may not be worth pursuing if the rate and terms aren’t more favorable.
However, if you’re ready to take the next step, our auto loan refinancing guide can help get you started.
