Is a 72-month car loan a bad idea?

One problem with longer car loans is the fact that you often wind up “underwater” or "upside down" on your loan. This is because cars tend to depreciate faster than you can pay off your loan. A 72-month car loan means you’re paying off your loan more slowly and have the potential to owe more than your car is worth. However, longer car loans let you secure a more affordable monthly payment, which is likely an important consideration for your budget.

Does refinancing my car hurt my credit?

The process of refinancing can temporarily lower your score. When you apply for a loan and a hard inquiry is submitted, your credit score will drop a few points. Following approval, a new loan account will lower the average age that your credit score holds which can lead to a lower score. But these two factors are a small part of what makes up your credit score and sticking with a monthly payment you cannot afford will likely lead to larger credit issues down the road.

Should I refinance if I’m far along on my original loan's repayment?

It is best to refinance your loan in the early stages of your loan. The interest gradually declines over the lifetime of your loan, so your potential to save money is much higher at the start of your loan. Be mindful that you likely won't be able to refinance within the first six months.

Does refinance start your auto loan over?

Refinancing does start your auto loan over, but it is not a perfectly clean slate. You will sign off on new, more competitive rates in order to save money on your monthly payments. It will make paying off the loan easier, but it is not a reset.

Where can I refinance my car loan?

You may be able to refinance your auto loan at a lower rate with your current lender. Consider starting there and then comparing options from online lenders, banks and credit unions.

Best auto loan refinance rates for September 2023

Written by

Rebecca Betterton

Edited by

Helen Wilbers

As of September 27, 2023

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Refinancing your auto loan allows you to replace your current loan with a new one in order to get more favorable terms and lower rates. They are available through a variety of lender types, so it is wise to shop around to consider which fits best for your needs.

Bankrate’s best refinance auto loans were chosen based on lender’s interest rates, customer experience, available terms and transparency. Consider the lender benefits and drawbacks outlined below to determine what the best financing option is for you.

When it comes to refinance loans, pay special attention to eligibility requirements and available terms. Doing so allows you to know whether your current loan qualifies, and you can adjust your loan to fit your monthly budget.

To successfully refinance your auto loan, follow these steps:

1

Decide if refinancing is the right financial move.

There are two main situations where refi makes sense: you can secure a better rate or you need a lower monthly payment.

2

Review your current loan.

Most lenders required a minimum of $3,000 to $5,000 in order to refinance, check your payoff amount along with your terms before starting the process.

3

Check your credit score.

Check your credit score to see if it has improved since your original loan approval. The higher your credit score, the better your new rate will be.

4

Estimate your car’s value.

Estimate the worth of your vehicle and compare it with how much you owe on your loan in order to determine if lenders will be willing to refinance. If you’re upside-down — meaning you owe more than the car’s worth — you’ll struggle to refinance.

5

Determine your savings.

Available interest rates vary by lender so shop around with at least three different providers. Be sure to compare potential rates with your current loan.

6

Get your paperwork in order.

Gather the necessary documentation and details of the current loan so you can walk away with better rates and terms.
Choosing the best lender comes down to saving you money — either overall or month to month. It’s recommended that you get quotes from at least three lenders before deciding which is right for you. When shopping for an auto loan, compare APRs (annual percentage rates) across multiple lenders. Look for lenders that keep fees to a minimum and offer repayment terms that fit your needs. Pay close attention to the following factors:

1

Approval requirements

Every lender has different requirements to receive approval. Lenders will consider aspects like your credit history, income and debt-to-income ratio.

But refinance loans have their own specifications on vehicle and existing loan requirements. Look out for acceptance criteria based on factors like vehicle age, mileage or time you’ve had the loan.

2

Your current loan

The goal of a refinance auto loan is to walk away with a more affordable monthly payment or lower cost overall. So be sure to compare the specifics of the potential new loan with your current rate. Keep in mind that a longer term is not always the best idea because you can pay more interest.

3

Repayment options

Through refinancing you can extend the life of your loan and lower the monthly payments or pay off the loan quicker and reduce the total cost. Consider which option fits your budget better when determining which lender offers the best terms.


4.0 Bankrate Score	APR from 5.24- 24.99%	Term 12-120mo	Min credit score 640	Apply on partner site	Apply on partner site
4.0 Bankrate Score	APR from 5.74%	Term 24-84mo	Min credit score 600	Apply on partner site	Apply on partner site
4.1 Bankrate Score	APR from 6.33- 28.55%	Term 24-72mo	Min credit score Not disclosed	Apply on partner site	Apply on partner site
3.9 Bankrate Score	APR from 5.24%	Term 24-72mo	Min credit score 700	Apply on partner site	Apply on partner site
3.4 Bankrate Score	APR from 4.29- 29.90%	Term 36-84mo	Min credit score Not disclosed	Apply on partner site	Apply on partner site
4.2 Bankrate Score	APR from 8.74- 16.19% * with AutoPay	Term 24-84mo	Min credit score Not disclosed	Apply on partner site	Apply on partner site
4.0 Bankrate Score	APR from 5.20- 18.00%	Term 24-84mo	Min credit score 560	Apply on partner site	Apply on partner site
4.2 Bankrate Score	APR from 4.67%	Term 24-96mo	Min credit score Not disclosed	Apply on partner site	Apply on partner site
4.3 Bankrate Score	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	Apply on partner site	Apply on partner site

Compare auto loan refinance lenders in September 2023

Lender	Starting APR	Term
LightStream	8.74% - 16.19%* with autopay	24 to 84 months
Autopay	4.67%	24 to 96 months
Caribou	6.33% - 28.55%	Not specified
Upstart	Varies by state	24 to 84 months
RefiJet	5.24%	Not specified

Loan details presented are current as of Sep. 18, 2023. Check the lenders’ websites for more current information. The auto loan lenders listed here are selected based on factors such as APR, loan amounts, fees, credit requirements and more.

Best auto loan refinance lenders of 2023

Best for fast funding

LightStream

4.2

See offers

Apply on partner site

Min. credit score:: Not disclosed
Fixed APR From:: 8.74% –16.19%
Loan amount:: $5,000– $100,000
Term lengths:: 2 to 7 years
Min. annual income:: Not disclosed

Overview: LightStream offers an easy-to-navigate online interface for unsecured loans. You can apply for repayment terms from 24 to 84 months and a high maximum refinancing amount of $100,000.

Why LightStream is the best for fast funding: If you are in a precarious financial position and need funding right away, LightStream is a great option. With same-day funding available and no additional origination fees, LightStream offers a quick online application process and a higher maximum loan amount than competitors.

Pros
Fast funding

Mobile application available

High loan amount
Cons
Unsecured loans

Must refinance at least $5,000

No prequalification
Who this lender is best for: Someone looking to refinance their vehicle quickly and at a high amount.

Impact on financial wellness: With no prequalification offered, drivers will undergo a hard credit pull upon application submission.

Time to receive funds: As soon as the same day you apply.

Fees: LightStream has no fees.

Additional requirements: Although not disclosed, the best rates will be offered to those with a strong credit history.

Special features: LightStream offers loan terms ranging from 24 to 84 months. The fast-funding timeline coupled with a range of repayment options will give you the freedom to lower your monthly payment.

Best for dedicated customer support

Autopay

4.2

See offers

Apply on partner site

Min. credit score:: Not disclosed
Fixed APR From:: 4.67%
Loan amount:: $2,500– $100,000
Term lengths:: 2 to 8 years
Min. annual income:: Not disclosed

Overview: Autopay presents borrowers with a range of loans directly from its network. The process is completely online and streamlined, empowering drivers to walk away with a new loan as soon as one business day.

Why Autopay is the best for dedicated customer support: Autopay has a team of loan experts who provide real-time support via text message or phone call on questions regarding the application or current loan.

Pros
Large range of acceptance criteria

Cash-back refinancing offered

Ability to compare multiple loans
Cons
Lowest APR only for excellent credit borrowers

Possible down payment

Unspecified credit requirements
Who this lender is best for: Best for someone looking to refinance their vehicle in one sitting with the assistance of a knowledgeable loan expert.

Impact on financial wellness: Following a full loan application after being matched with a lender, borrowers will undergo a hard credit pull.

Time to receive funds: Funding with Autopay can be available as soon as one business day.

Fees: Additional fees vary by each lender.

Additional requirements: Specific requirements are not disclosed. But to refinance, vehicle information on mileage will likely be required.

Special features: Available in all 50 states, Autopay works with a large network of lenders with a high maximum loan amount that allows for borrowers from a range of financial backgrounds to refinance.

Best online experience

Caribou

4.1

See offers

Apply on partner site

Min. credit score:: Not disclosed
Fixed APR From:: 6.33% –28.55%
Loan amount:: $0– $100,000
Term lengths:: 2 to 6 years
Min. annual income:: Not disclosed

Overview: Through a number of lender partners, Caribou considers a driver's credit history to match them with a potential lender. The process can be done completely online and simply requires vehicle information.

Why Caribou is the best for shopping online: Caribou’s app and online experience make it very easy to compare different lender rates side by side. Even with its online presence Caribou encourages drivers to speak with its team members who can assist with specific questions seven days a week via phone, email or appointment.

Pros
Customer service available seven days a week

Insurance bundling option

Prequalification offered
Cons
Not available in all states

Processing fees

Undisclosed requirements
Who this lender is best for: Drivers looking to lower their monthly rates and compare potential loans directly online.

Impact on financial wellness: Following your application approval, a hard credit pull will affect your credit score.

Time to receive funds: The funding timeline varies by lender.

Fees: Borrowers can expect a $399 processing fee separate from lender expectations.

Additional requirements: Requirements include personal information about yourself and details about your vehicle.

Special features: Caribou encourages drivers to bundle their new loan with other driving needs such as insurance or extended protection.

How refinancing a car loan works

Refinancing a car loan is essentially just taking out a new car loan — so the steps for applying are mostly the same. You'll need your driver's license, Social Security number and proof of income and insurance, as well as details about your car. If approved, you'll use the funds from your new loan to pay off your old car loan, then begin making monthly payments with your new interest rate and terms.

When should you refinance your car loan?

Refinancing your car loan comes down to saving you money. If you are struggling to afford your vehicle payments or think you could receive more favorable terms, it’s a good idea to consider refinancing your current loan. Here are the three main scenarios where refinancing is the right choice.

Your credit has improved. Competitive rates are reserved for drivers with very good or excellent credit — scores of 740 and above. So, if your credit score has risen since you signed off on your initial loan agreement, refinancing could save you money on your monthly payments.
You financed through a dealership. Dealer financing likely did not present you with the best available rates and terms. You might be able to get a better deal if you shop elsewhere and refinance your initial vehicle loan.
You can’t afford your monthly payments. If you are struggling to make your monthly vehicle payments and are at the risk of losing your vehicle it is a good idea to refinance your loan. This way you can extend your terms to lower your monthly costs. Keep in mind that you will have to pay more interest over the life of the loan.
You have positive equity. If you have positive equity in your vehicle, or the value of your vehicle is worth more than you owe, the cash-out refinance process could present you with some extra money and improved loan terms.
You have issues with your current lender. If you are struggling with your lender, refinancing may help avoid future problems. But look out if there are prepayment penalties enforced, which could outweigh your savings.
Interest rates dropped. Even if there hasn’t been a boost in your credit, if interest rates have changed with the prime rate then you may be able to secure improved rates — especially if a lot of time has passed.

Pros and cons of refinancing an auto loan

The choice to refinance your auto loan requires some consideration on the state of your finances and vehicle. Weigh the benefits and drawbacks before moving forward with it.

Pros

Potential to decrease monthly cost.
Ability to sign off on more competitive interest rates.
Likelihood of paying off auto loan sooner.
Accessing quick cash.

Cons

Potentially high interest rates.
Additional fees incurred.
Risk of becoming upside-down on loan.

What to know before applying for a refinance auto loan

As with any loan, it is best to shop around to different lenders before making your final decision. Each lender has its own methodology when determining your interest rates and terms — so compare to see which best fits your needs.

While every lender measures risk differently, interest rates depend greatly on your credit. Do your homework ahead of time to get a clear picture of what lenders are looking for and the terms you will be offered based on your credit history. This research can help you avoid common refinancing mistakes.

Bankrate tip

When comparing lenders pay close attention to any prepayment penalties that you may incur. Factor that in when calculating if refinancing will save money.

FAQs about auto loan refinance

The process of refinancing can temporarily lower your score. When you apply for a loan and a hard inquiry is submitted, your credit score will drop a few points. Following approval, a new loan account will lower the average age that your credit score holds which can lead to a lower score.

But these two factors are a small part of what makes up your credit score and sticking with a monthly payment you cannot afford will likely lead to larger credit issues down the road.
It is best to refinance your loan in the early stages of your loan. The interest gradually declines over the lifetime of your loan, so your potential to save money is much higher at the start of your loan. Be mindful that you likely won't be able to refinance within the first six months.
Refinancing does start your auto loan over, but it is not a perfectly clean slate. You will sign off on new, more competitive rates in order to save money on your monthly payments. It will make paying off the loan easier, but it is not a reset. Your new loan balance will reflect what you owed at the time you refinanced, not your original one.

The number of payments on the previous loan also don't carry over to the new one. While the amount is still paid off, you won't have the mark of those payments on the new loan.
Some lenders will expect drivers with poor credit to put money down to provide extra security for the loan. So having cash to refinance can help by lowering the price you’ll have to pay to finance the vehicle. Though a down payment is not always required, equity — the difference in the value of the vehicle and the amount you owe — is.
Refinancing does not automatically mean you are handed a check with more cash, but you may be able to benefit from the equity you have in your car. With cash-out refinancing, you essentially finance for more than you owe so that you get that leftover money in the form of cash — along with an improved auto loan.
To determine if refinancing is worth it for you, you must consider if you will truly save money with new loan terms. For many drivers, it does prove to be worth it if their credit score has improved since they first took out their auto loan, or they originally financed through a dealership. Take advantage of an auto refinance calculator to find out if you will save money with a new loan.
Refinancing your car loan comes with risks that include potentially high interest rates and additional fees. Due to the current state of the market, it is possible you will be met with higher than usual interest rates.

A new loan means extra costs, such as application, transfer and origination fees. And if you extend your loan term, you are more susceptible to becoming upside down on your loan and paying more interest.
You technically can refinance your car loan with poor credit. But unless your score has improved since you initially signed, you will likely not receive improved terms. Instead, consider loan modification or vehicle trade-in.
You may be able to refinance your auto loan at a lower rate with your current lender. Consider starting there and then comparing options from online lenders, banks and credit unions.

Methodology

To select the top refinance car loans, Bankrate considers 16 different factors. These factors range in consideration from the loan amount, disclosed APR and acceptance criteria. Each lender holds a score based on four categories.

Availability: This accounts for loan amounts, vehicle restrictions and availability in each state.
Affordability: Primarily, this section covers expected APR, acceptance criteria, discounts for autopay and the number of fees.
Customer experience: This category includes online access, support availability, funding timeline, option for automatic payment and app availability.
Transparency: Here prequalification and disclosure of rates and fees are accounted for.

Best auto loan refinance rates for September 2023

How to refinance an auto loan

How to choose the best lender

On this page

Compare auto loan refinance lenders in September 2023

Best auto loan refinance lenders of 2023

Best for fast funding

LightStream

Pros & Cons

Eligibility & More

Best for dedicated customer support

Autopay

Pros & Cons

Eligibility & More

Best online experience

Caribou

Pros & Cons

Eligibility & More

How refinancing a car loan works

When should you refinance your car loan?

Pros and cons of refinancing an auto loan

Pros

Cons

What to know before applying for a refinance auto loan

Bankrate tip

FAQs about auto loan refinance

Does refinancing my car hurt my credit?

Should I refinance if I’m far along on my original loan's repayment?

Does refinancing start your auto loan over?

Do I need cash to refinance?

Can you get money back when you refinance a car loan?

Is refinancing a car worth it?

What are the disadvantages of refinancing an auto loan?

Can you refinance a car loan with bad credit?

Where can I refinance my car loan?

Methodology