Best auto loan refinance rates for September 2022
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.
Bankrate’s best refinance auto loans are chosen based on lenders' interest rates, customer experience, available terms and transparency. Lender benefits and drawbacks are fully outlined to help you determine what the best financing option is for you.
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.
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.
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Once you find the right refinance auto loan for your situation, follow these steps:1
Review your current loan.
Determine how much you are currently paying in interest and what rate you can afford.
2Check your credit score.
Check to see if your credit has improved since your original loan approval. The higher your score, the better your rate will be.
3Determine the value of your car.
Estimate the worth of your vehicle in order to determine if lenders will be willing to refinance.
4Shop around.
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.
5Sign off on the new loan.
Gather the necessary documentation and details of the current loan so you can walk away with better rates and terms.
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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. Pay close attention to the following factors.
1Approval 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.
2Your current loan
The goal of a refinance auto loan is to walk away with a more affordable monthly payment. 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.
3Repayment options
Through refinancing you can extend the life of your loan and lower the monthly payments or pay off the loan quicker. Consider which fits your budget better when determining which lender offers the best terms.
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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. | |||
|---|---|---|---|---|---|
3.9 Bankrate Score | APR from 2.79% | Term 24-60mo | Min credit score 680 | Apply on partner site | Apply on partner site |
| APR from 5.30- 5.80% | Term 24-72mo | Min credit score 700 | Apply on partner site | Apply on partner site | |
3.5 Bankrate Score | APR from 3.19% | Term 48-60mo | Min credit score 700 | Apply on partner site | Apply on partner site |
4.2 Bankrate Score | APR from 5.99- 10.99% with AutoPay | Term 24-84mo | Min credit score Not disclosed | Apply on partner site | Apply on partner site |
3.7 Bankrate Score | APR from 7.24% | Term 36-72mo | Min credit score Not disclosed | Apply on partner site | Apply on partner site |
4.2 Bankrate Score | APR from 3.24% | Term 36-60mo | Min credit score Not disclosed | Apply on partner site | Apply on partner site |
3.9 Bankrate Score | APR from 2.69% | Term 60mo | Min credit score 700 | Apply on partner site | Apply on partner site |
3.2 Bankrate Score | APR from 2.49% | Term 60mo | Min credit score 700 | Apply on partner site | Apply on partner site |
3.6 Bankrate Score | APR from 3.12% | Term 48-60mo | Min credit score 700 | Apply on partner site | Apply on partner site |
4.1 Bankrate Score | APR from 2.20- 29.99% | Term 24-84mo | Min credit score Not disclosed | Apply on partner site | Apply on partner site |
| APR from 2.99- 24.99% | Term 60mo | Min credit score Not disclosed | Apply on partner site | Apply on partner site | |
| APR from 2.74- 14.99% | Term 24-84mo | Min credit score 600 |
The Bankrate guide to choosing the best refinance auto loan
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At Bankrate, our mission is to empower you to make smarter financial decisions. We’ve been comparing and surveying financial institutions for more than 40 years to help you find the right products for your situation. Our award-winning editorial team follows strict guidelines to ensure the content is not influenced by advertisers. Additionally, our content is thoroughly reported and vigorously edited to ensure accuracy.
What to know first
When shopping for an auto loan, compare APRs (annual percentage rates) across multiple lenders to make sure you’re getting a competitive rate. Look for lenders that keep fees to a minimum and offer repayment terms that fit your needs. Loan details presented here are current as of Sept. 2, 2022. 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.
Compare auto loan refinance rates in September 2022
| Lender | Starting APR | Term |
|---|---|---|
| LightStream | 5.99 | 24 to 84 months |
| Autopay | 1.99% | 36 to 60 months |
| Caribou | 1.99% | 24 to 60 months |
| Upstart | 7.13% | 24 to 84 months |
| RefiJet | 2.49% | 48 to 60 months |
Details: Best auto loan refinance rates of September 2022
LightStream: Best for fast funding
- Fast funding
- Mobile application available
- High loan amount
- Unsecured loans
- Must refinance at least $5,000
- No prequalification
Autopay: Best for dedicated customer support
- Large range of acceptance criteria
- Cash-back refinancing offered
- Ability to compare multiple loans
- Lowest APR only for excellent credit borrowers
- Possible down payment
- Unspecified credit requirements
Caribou: Best online experience
- Customer service available seven days a week
- Insurance bundling option
- Prequalification offered
- Not available in all states
- Processing fees
- Undisclosed requirements
Upstart: Best for people with bad credit
- APR caps out at 17.99 percent
- Prequalification available
- Flexible acceptance criteria
- No minimum APR stated
- Must borrow at least $9,000
- No co-borrowers
RefiJet: Best for loan comparison
- Direct customer support
- Bilingual site availability
- Cash-back refinance
- Traditional underwriting criteria
- Potential lender fees
- Must speak with a representative to prequalify
What are refinance car loans and how do they work?
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.
What happens when you refinance a car loan?
When you refinance your car loan you receive a new auto loan that replaces your current one. The process is similar to that of getting your initial loan. Following application and approval, you will pay off the initial loan with your new one, then begin making payments on your new loan.
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 refinance is the right choice.
- Your credit has improved. Competitive rates are reserved for drivers with good or excellent credit — scores of 670 and above. So, if your credit score has risen in points 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.
Can you refinance a car loan with bad credit?
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.
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 understand your credit history to get a clear picture of what lenders are looking for and what type of terms you will be offered.
FAQs about refinance
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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- or 84-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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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.