Auto Loan Refinancing Guide – Bankrate.com

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The choice to refinance your auto loan is one that requires research and preparation. Part of that research includes determining if your goal is to walk away with better rates and terms or lower your monthly payment. Regardless, refinancing simply replaces your current loan with a new one. This guide outlines the ins and outs of refinancing your vehicle loan, from the nitty-gritty of the steps to take, the benefits and drawbacks and the basic requirements.
Rebecca Betterton is the auto loans reporter for Bankrate. She specializes in assisting readers in navigating the ins and outs of securely borrowing money to purchase a car.
Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complex topics into manageable bites.
The first step when refinancing your auto loan requires you to determine if the process is the right financial move. The main two scenarios that refinance might be a good idea are: if you can walk away with a better rate or if you are having trouble making payments. 
In order to decide if it is the right choice you must take the time to review your current loan. It’s best to use a calculator and compare potential savings against what you pay for your existing financing. Finally take stock of your credit score to ensure that you can ultimately walk away with an improved loan. Remember: If your score is at the same spot as when you signed — or worse, lower — refi might not benefit you.  
This guide will help you understand the types of auto loans available.
Record-high vehicle prices and interest rates cause auto loan debt to soar.
You can save money with used tires, but there are safety factors to consider before buying.
Another hike means higher rates — but there are still ways to save.
This guide will help you understand the types of auto loans available.
Record-high vehicle prices and interest rates cause auto loan debt to soar.
You can save money with used tires, but there are safety factors to consider before buying.
Another hike means higher rates — but there are still ways to save.
The refinance application process is likely going to be fairly similar to what you did when you applied for your initial loan. After shopping around at three or more lenders you can apply with the one that best fits your needs. Most lenders allow for an online application, but you will likely have a hard credit pull before acceptance — which can lower your score slightly. 
Pay close attention to the specific requirements that the lender carries when it comes to mileage, vehicle type, time you’ve had the loan and remaining loan balance. On top of this, it is a good idea to get your paperwork in order ahead of applying. This includes details about your vehicle — and information about your existing loan that you wouldn’t have needed for your first loan application.
This guide will help you understand the types of auto loans available.
Record-high vehicle prices and interest rates cause auto loan debt to soar.
You can save money with used tires, but there are safety factors to consider before buying.
Another hike means higher rates — but there are still ways to save.
This guide will help you understand the types of auto loans available.
Record-high vehicle prices and interest rates cause auto loan debt to soar.
You can save money with used tires, but there are safety factors to consider before buying.
Another hike means higher rates — but there are still ways to save.
Finally, you will receive your new auto loan. You can now pay off your old loan and start making payments on your new one. The process varies depending on the lender, but you will either receive payment or it will be sent directly to the previous lender. 

Either way, it is wise to confirm this process was done before halting payments on your old loan so you don’t wind up with late fees or other charges.
This guide will help you understand the types of auto loans available.
Record-high vehicle prices and interest rates cause auto loan debt to soar.
You can save money with used tires, but there are safety factors to consider before buying.
Another hike means higher rates — but there are still ways to save.
This guide will help you understand the types of auto loans available.
Record-high vehicle prices and interest rates cause auto loan debt to soar.
You can save money with used tires, but there are safety factors to consider before buying.
Another hike means higher rates — but there are still ways to save.
Before hitting reset on your auto loan it is important to weigh the benefits and drawbacks of signing off on a brand-new loan. 
Less expensive monthly payments
Ability to pay off the loan sooner
Lower interest rates
Potential fees
More paperwork
Could extend loan
Auto refinance is the right choice if you can save money — specifically on incurred interest — or you need relief and can’t get your loan modified. But as interest rates continue to rise due to high inflation, determining if it is right for you requires extra consideration.  
Each lender carries its own eligibility criteria when it comes to auto refinance loans. But there are the common requirements you will likely run into. 
Every lender holds different regulations for loan amounts but if you have too little remaining or even too much, lenders may stray away. Typical minimums to refinance fall around $3,000 while maximums are usually under $50,000. 
Depending on where you stand in the lifetime of your loan, refinancing might not be possible. Most lenders expect you to be at least six months in and have at least six months remaining. On the other end, if you’re far into the loan it might be better to just pay it off than apply for refinancing. 
The better your credit score is, the more competitive rates you will receive. So while perfect credit is not a requirement, anything that is below 600 likely won’t leave you with a better rate — and could even cost you more.
Most lenders do not allow refinancing for vehicles over 10 years old. On top of vehicle age, if your car has racked up a lot of miles lenders may stray away. Maximums of 100,000 to 150,000 miles are common. 
The perfect number varies by lender, but you usually want less than 50 percent. Your debt-to-income (DTI) ratio is the difference between your income and the amount of debt. It’s best to use a calculator in order to find your DTI before applying.
It is best to take advantage of an auto refinance calculator that will do the heavy lifting for you. Once you have a handle on how much you could potentially save you begin your refinance process.
To determine potential savings from refinancing your auto loan you’ll need to compare your current loan with the new one. This is not as simple as looking at the two monthly payment numbers, instead, you must factor in how total interest comes into play. 
While it is not inherently bad or good to have a loan with a long term, a longer-term loan does carry more risk. Primarily the chance of becoming “upside down” or “underwater” on your loan for an extended period. This happens if you owe more than your vehicle is worth.
The process may temporarily cause a dip in your credit score due to the fact that applying will cause a hard credit pull. On top of that, your score could decrease due to the added account. But this will only cause minor drops and will likely help your credit in the long run — especially if you are struggling to pay your current loan.
While you can now take a deep breath with a new and improved loan in hand, there is still some important work to be done. These considerations will ensure you stay on top of your new loan. 
Until you get the go ahead from your previous lender it is important to continue making payments on your loan. If an issue arises and you overpay, the lender can likely credit the amount back to you. Once you receive the new loan either you or your lender will handle the final loan payment. Check with your lender to avoid any additional charges. 
Payment schedules vary by lender but generally, you will be expected to begin making payments 30 days after accepting the loan. It is wise to set up automatic payments if it is available to prevent any missed payments. Along with this, do not put off any payments in order to avoid any building interest. If you feel yourself heading into a precarious spot contact your lender and explain the situation before it gets too late.
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The annual percentage rate (APR) includes your interest rate, plus any loan fees. It reflects the total cost of borrowing.
The period of time until your loan achieves maturity and is paid off in completion. Terms can be expressed in months or years, depending on the details of your loan.
The minimum credit score typically required to qualify for a loan with a given lender. Exact thresholds are not always disclosed by a lender and in certain cases the minimum score is the best estimate based on publicly available information. Credit score refers to FICO 9.0 unless otherwise stated.
REFINANCE
3.9
2.83- 36.00%
24-60mo
700
REFINANCE
3.5
3.19%
48-60mo
700
REFINANCE

  • Get approved in 2 minutes or less for credit lines up to $200,000.
  • Apply once, even if you aren't ready to purchase for up to 24 months
  • Use Flexline™ to buy new or used vehicles, buyout leases or refinance loans.
  • No impact to credit for pre-approval. One hard credit pull to access line of credit for life*
  • *Lifetime access with rotating balance, lifetime access expires with 24 months of inactivity

REFINANCE
3.8
7.29- 11.54%
36-72mo
700
REFINANCE
4.59- 14.99%
24-84mo
600
REFINANCE
4.2
3.24%
36-60mo
Not disclosed
REFINANCE
3.9
2.69%
60mo
700
REFINANCE
3.2
2.49%
60mo
700
REFINANCE
2.99- 24.99%
60mo
Not disclosed
REFINANCE
3.9
3.12%
48-60mo
700
REFINANCE
4.2
6.49- 14.24%
24-84mo
700
REFINANCE
4.1
2.20- 29.99%
24-84mo
Not disclosed
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