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Best Auto Refinance Loans of 2022

Sarah Moore

Refinancing your car can save you money by lowering your interest rate, reducing your monthly payment, and lowering the total amount of interest you pay on your loan. We’ve evaluated the best auto refinance loans based on rates, terms, loan options, customer reviews, and overall quality.

Personalized quote in a few minutes

2.32% - 21.24%

Est. APR

650

Min. Credit Score

$5,000 - $100,000

Loan Amount

Overview

Caribou connects you with a network of auto loan lenders, so you can save time and compare multiple quotes in just a few clicks.

What we like

  • No SSN required
  • Prequalify with a soft credit check
  • Online application process
  • Accepts co-borrowers

What we don't

  • Processing fees
  • Vehicle restrictions
  • No customer support on weekends

Easy online application

2.25% - 29.99%

Est. APR

510

Min. Credit Score

$9,000 - $60,000

Loan Amount

Overview

Upstart uses leading AI technology to assess the true risk of a borrower and improve access to affordable credit.

What we like

  • Easy online application
  • Soft credit inquiry
  • Flexible loan amounts and terms
  • Considers variables in addition to credit history
  • Low minimum credit score requirement

What we don't

  • Low maximum loan amount
  • Co-borrowers not allowed
  • Only personal income considered

When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information will be reported to the credit bureaus.

Although educational information is collected as part of Upstart’s rate check process, neither Upstart nor its bank partners have a minimum educational attainment requirement in order to be eligible for a loan.

The full range of available rates varies by state. The average 5-year loan offered on Upstart will have an APR of 10.56% and 60 monthly payments of $463 per $20,000 borrowed. For example, the total cost of a $20,000 loan would be $27,795. APR is calculated based on.

5-year rates offered in April 2022. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.

Directly pays your existing auto loan

3.69% - 9.84%

Est. APR

550

Min. Credit Score

$5,000 - $100,000

Loan Amount

Overview

Upgrade will assist you in refinancing your current auto loan at a cheaper interest rate by using loans from its bank partners.

What we like

  • Direct repayment of existing auto loan
  • No prepayment penalties
  • Easy online application process
  • View rates without hard credit check

What we don't

  • Loan terms not revealed before application
  • Only personal vehicles allowed
  • Loans not offered for new purchases

No restrictions on age or mileage

Varies

Est. APR

660

Min. Credit Score

$5,000 - $100,000

Loan Amount

Overview

LightStream Auto Loans are a good fit for borrowers that are looking for same-day funding and no vehicle restrictions on age or mileage.

What we like

  • Same-day funding available
  • Power to negotiate as a cash buyer
  • AutoPay discount
  • No restrictions on age or mileage
  • No fees

What we don't

  • Pre-qualification not available
  • Excellent credit is required for the lowest rates

Should you refinance your car?

If you’re considering refinancing your car, know that there are many reasons why it could make sense for you. Here are some of the most common reasons people refinance their cars:

  • Getting a better interest rate: The first reason to refinance is to get a lower interest rate. You may be able to secure a lower APR by refinancing into a fixed-rate loan with a longer term. This can help reduce monthly payments and make it easier to pay off your debt faster.
  • Making car payments more manageable: People refinance their cars because they need more flexibility in their budget. If you’re struggling to make ends meet each month, refinancing can help alleviate some of the pressure by spreading out payments over several years instead of just one or two years. For example, if your current loan has payments every two weeks, but you’d prefer monthly payments, refinancing could give you what you want without changing the amount owed on your current loan or vehicle itself.
  • Paying off your car loan sooner: When you refinance your car, the interest you pay each month may decrease or stay the same. If you have enough equity in your car and a good credit score, refinancing could allow you to pay off your loan sooner and save money on interest payments.
  • Repayment terms: If the new terms of your financing are better than those offered by your original lender or dealer, then refinancing could help save money. You’ll have more flexibility with interest rates and fees, plus you might be able to get a lower payment or longer repayment period if you’re having trouble making payments now.

When can you refinance a car loan?

You can refinance your car almost anytime unless there are restrictions on your current loan. Consider the following scenarios to refinance:

  • Interest rates have dropped: If interest rates have dropped since you took out your car loan, you may be able to refinance for a lower rate.
  • Credit score has improved: The better your credit score, the more lenders will want to give you a lower rate on your new loan. If your score has improved, you could see a significant difference in rates between the two loans.
  • Change your monthly payments: A new loan could have a lower interest rate, meaning a lower monthly payment. You could also change the terms to be longer, so your payments are stretched out, but your overall cost of the loan will be higher.
  • Remove a cosigner: If you want to remove a cosigner, refinancing can help.

How do you refinance a car loan?

Here’s how:

  • Apply for a new auto loan: Once you know which lender has the lowest rate, it’s time to apply for the loan. You can typically apply for an auto loan online or over the phone.
  • Gather the necessary documents for a loan application: Lenders will want to see proof of income and references from past employers. You’ll also need to provide information about any existing auto loans.
  • Review the terms and sign the contract: Before signing any contract, review all terms carefully, so there are no surprises later on down the road. Ensure that you understand exactly how much those payments cost each month. 

What affects auto loan interest rates?

They include:

  • Credit Score: A high credit score indicates that you are a lower risk to lenders, allowing them to offer you a better interest rate. If your score is below 600, you may have trouble getting approved for an auto loan.
  • Debt-to-income ratio: This is the amount of average monthly debt payments divided by gross monthly income. Lenders use this to determine how much you can afford to borrow on an auto loan. For example, if your debt-to-income ratio is 50 percent, half of your income goes toward paying off monthly debts.
  • Amount borrowed and down payment: The amount you borrow also affects the interest rate you’ll get on your loan. The more money borrowed will lead to a higher interest rate because lenders want to ensure they’ll get paid back with interest over time.
  • Age of the vehicle: If you’re buying a new car that’s expected to lose value, you might get a lower interest rate than buying a used car. Old cars will also have a lower life expectancy.

Can you refinance if you owe more than your car is worth?

You can still refinance your “upside-down,” or “underwater,” auto loan. Lenders know cars depreciate quickly. Cars depreciate in value quickly and lose about 20% of their value in the first year and around 50% to 60% after five years.

However, keep in mind that if you are looking at refinancing an auto loan, then you will most likely be required to have a job with a steady income. Lenders require proof of income when they give out loans.

Does refinancing a car hurt your credit?

In most cases, refinancing your car has little impact on your credit score as it’ll only temporarily negatively affect it during a hard credit pull, but it can improve it in the long run.

Since refinancing doesn’t increase your overall debt payments but frees up more money if you got a lower rate, it can help bring down the debt-to-income ratio and improve your score.

Can you refinance a car loan with bad credit?

Yes, you can get a car loan with bad credit but the terms might not be the best. If you have bad credit and need to take out a loan to refinance a car, you might be able to negotiate better terms and save money on interest by refinancing your auto loan.

How to choose the best auto refinance loans

If you’re considering refinancing your auto loan, here’s what you need to know:

  • Requirements for refinancing: The first step is to check your eligibility. Most lenders require that you have a good credit score, a stable income, and sufficient assets to secure the loan. They also want proof of employment, such as W-2s or 1099s.
  • Prepayment penalties: Some lenders will not allow you to prepay your loan early without incurring fees and penalties, while others will allow this with minimal or even none. If you’re planning on making extra payments on your loan, it’s important that you find out if there are prepayment penalties before signing up for the loan. 
  • Compare rates: Compare the lender’s interest rates and repayment terms before deciding which one you would like to use.
  • Reputable lender: Reputable lenders will have many customer reviews on their websites or through other websites such as Yelp or Google Reviews. Searching for these reviews before choosing any lender will give you an idea of how long the company has been in business and whether or not they have satisfied customers who have used them in the past.