*AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Excellent credit required for lowest rate. Rates vary by loan purpose.
Quick Look: Best Personal Loans for Auto Refinancing
- Best for Passenger Car Drivers: Caribou
- Best for Recreational and Passenger Vehicle Loans: Auto Approve
- Best for $0 Origination Fee: LightStream
- Best for Refinancing: RefiJet
- Best for Bad Credit: Auto Credit Express
- Best for Comparing Lenders: LendingClub
- Best for Refinancing on Older Vehicles: Pentagon Federal (PenFed) Credit Union
When it comes to physical assets, a car is among the most significant purchases people make after a home or property. But unlike a house, a car is a rapidly depreciating asset that accumulates wear and tear quickly.
Because vehicles rapidly decline in value, getting a fair auto loan is vital. Auto loan rates vary, but it's not difficult to find a good deal with solid credit. If your credit is poor, you could be looking at interest rates that are 10% or higher.
If you aren’t happy with your current auto loan, you might want to consider refinancing options, especially if your financial picture has improved since you first financed the car.
6 Best Personal Loans for Auto Refinancing
An auto refinance loan doesn’t come in a neat little package. Customers will find different lenders are more suitable to them, depending on the circumstances. With a low credit score, the most affordable lenders may shy away from doing business, but there are still plenty of reputable options for consumers across the credit score spectrum. Here are Benzinga’s top choices.
Caribou is an auto refinancing platform that offers fast, hassle-free car financing. With an superb refinancing loan offer, you could potentially save thousands of dollars through the lifetime of your auto loan. However, most car owners find financing or refinancing auto loans to be too complicated. This is where Caribou comes in.
Caribou has a network of lenders like community banks and credit unions that help you find optimal refinancing and insurance options. You do everything online so that you can get competitive, low-interest loan rates, retitle the vehicle, etc.
Borrowers looking for auto refinancing can easily shop multiple options without providing SSNs. The application process is entirely online, and checking your loan options does not impact your credit.
Auto Approve ranks at the top of the list because automobile loans are all it does. Whether you’re refinancing a car, RV, motorcycle or even a boat, Auto Approve works with various lenders across the country to get low rates and manageable payment plans. Auto Approve has some of the highest customer approval rankings among auto lenders and an A+ rating with the Better Business Bureau. In addition, LendingTree named Auto Approve the No. 1 auto financier for customer satisfaction in the fourth quarter of 2020.
Clients at Auto Approve can get vehicle refinance loans and lease purchase loans if they’re driving a leased car and wish to own it. Auto Approve loans have no application fee and only a soft credit pull is required to see rates. The average loan length varies from 12 to 84 months. Approval requires a 580 or better credit score, with the best rates starting at 2.25%.
LightStream is one of the more reputable online lenders in the industry, with offerings for everything from debt consolidation to auto refinancing to personal loans. Even its slogan “Loans For Practically Everything” points toward its versatility and flexibility in personal lending.
However, LightStream is geared toward the upper end of the credit score totem pole. Clients will need a 660 credit score to be considered for LightStream’s auto refinance loans.
RefiJet is a Colorado-based vehicle refinancing service that opened in 2016. Like Auto Approve, RefiJet is strictly in the business of vehicle loans for cars, trucks, RVs and motorcycles. RefiJet serves a range of clients and works with several lenders willing to accept fair credit. The minimum credit score for approval is 500.
RefiJet offers loans starting at 2.49% with varying terms depending on credit history and vehicle type. Vehicle condition and age will dictate the type of loan received. Only vehicles newer than 10 years old with less than 150,000 miles are eligible for a loan. RefiJet performs a soft credit pull when checking rates and a hard pull when filing the final application.
Auto Credit Express
Auto Credit Express specializes in vehicle loans for subprime borrowers with low credit scores. There’s no minimum score requirement for an Auto Credit Express loan, which makes it ideal for consumers looking to get out from under a bad loan who don’t have the credit clout for more affordable options.
In addition, military members are offered a special discount, and the Auto Credit Express website provides many helpful calculators for budgeting and total loan payoff amounts. It even has loan options for consumers who have declared bankruptcy.
Because bad credit loans require no minimum credit score, Auto Credit Express will have higher rates than most lenders on this list. Although bad or no credit isn’t an automatic denial at Auto Credit Express, the loan being refinanced must be in good standing. Applicants with bad credit will also need to prove their income sources and may be required to submit a down payment on the loan to get financing approved. Potential borrowers should prepare a list of personal references as well.
LendingClub is an online lending marketplace where consumers can compare options for various loans. While many competitors exist for this type of service, LendingClub has several valuable tools for finding the right loan and a wide range of network connections for lending partners. Users also can search the site for auto refinance options via credit score, preferred interest rate range or desired length of the loan.
Alongside its Rolodex of possible lenders, LendingClub has a library of useful articles and blogs about auto refinancing. The search tool is the most useful among auto marketplace aggregators, allowing users to quickly research loan options by entering different inputs. Users can also search for lender reviews to gain insight into the policies and practices of each company.
PenFed Credit Union
PedFed is one of the top choices for auto refinance loans if seeking to do business with a credit union. Despite the name, PenFed isn’t just for military members or public employees — anyone can be a member at PenFed as long as they open a savings account and fund it with $5.
PenFed has different options for auto refinancing loans depending on the car's age. Newer vehicles with less than 7,500 miles can get the best loan terms: 36 to 84 months for amounts ranging from $500 to $150,000 at rates as low as 1.79%. Rates for cars with more than 7,500 miles begin at 2.39%. An excellent credit score is required to get these top rates, and borrowers can complete the application 100% online.
Frequently Asked Questions
Can an auto refinance loan hurt my credit score?
Yes, an auto refinance loan can hurt your credit score in certain situations. If you apply for too many loans that require a hard credit report pull, your score can be negatively impacted — even if you don’t get approved. Additionally, your score can decline if you take on too much debt or fail to make timely payments.
How are auto refinance loan rates calculated?
No two lenders have the same formula for pricing loans. Obviously, lower rates will go to those with higher credit scores, but the FICO score isn’t the only factor in the equation. An auto loan has a hard asset as collateral (the car), so the vehicle’s age, mileage and make or model play in role in determining auto refinance loan rates.
Can I get an auto refinance loan with bad credit?
Yes, many companies exist specifically to link low-credit borrowers with banks or institutions willing to lend to them. Most auto lenders require 650 or better FICO scores, but companies like Auto Credit Express can provide solutions to borrowers with scores as low as 300.
Auto Refinance Loan Requirements and Criteria
Auto refinance loans require a little more personal data than an unsecured personal loan. Because rates for auto loans are usually better than personal loans, borrowers must have good credit and a car that holds value.
Credit score: Like most types of loans, credit score plays the most prominent role in determining rates. For example, many auto refinance lenders require FICO scores greater than 650 to get the best rates. However, subprime borrowers can still refinance at certain firms with credit scores of 300.
Vehicle condition: Lenders like LightStream have no vehicle condition requirements, but this isn’t the norm for most lenders. Vehicle make and model occasionally come into play. However, lenders are primarily concerned with the vehicle’s age and mileage. Unfortunately, older cars have a short shelf life and retain little of their original value, so many lenders will deny an application if the vehicle is over a decade old.
Proof of insurance and driver’s license: Borrowers should have their license and insurance in proper standing with their state if applying for an auto refinance loan. A suspended license or lack of insurance coverage could result in denial.
Proof of income (for bad credit): If you’re looking for a subprime auto loan, be prepared with some paystubs or other proof of income when filling out an application. Borrowers with bad credit must show they have enough steady income to make payments on the loan. Many lenders require a down payment for a subprime auto refinance loan, so have some cash on hand to meet this obligation.
Things to Consider Before Getting an Auto Refinance Loan
Are you thinking about refinancing your auto loan? Before applying for a new loan, consider your personal finances and the status of your existing loan. Auto refinance loans don’t always make sense, especially if the life of the loan is extended over a long period. Here are a few questions to ask yourself before refinancing.
What is Your Current Financial Situation?
How does your current financial picture look? Are you struggling to meet your monthly obligations for the auto loan?
If you have a relatively neat financial situation and don’t have an option to lower your rate significantly, consider sticking with your existing loan and cutting spending elsewhere. You don’t want to put yourself into debt longer than necessary just to save a few bucks each month.
What are Recent Trends in Interest Rates?
If you can lower your interest rate while still making timely monthly payments, you might want to consider refinancing if interest rates are rising (like they currently are). You may not get a better deal by waiting, and if your current loan is particularly onerous, refinancing now could be a great opportunity.
But if you have a loan with a low rate, you might not find a better solution in the current environment. In that case, keep paying the low rate loan until refinancing becomes more attractive.
Are Your Monthly Payments Still Affordable?
The primary reason most people refinance their auto is that the monthly payments have become too burdensome. Long term, an auto refinance loan might not improve your financial situation, but that might not be your main concern if you’re struggling to pay the mortgage or credit card bills.
If a high monthly car payment is causing you to rack up debt on high-interest credit cards, an auto refinance loan is prudent, even if you wind up paying more for the vehicle than it's worth. Debt from an auto loan is almost always more manageable than credit card debt.
What’s Your Car’s Condition?
If you have a beat-up old jalopy, you probably don’t need an auto refinance loan, even if the terms of your current loan are less than stellar. Older cars are the most expensive to finance because they have very little value.
Remember, you’re swapping a new loan for your old loan, not fixing up the car. If your car is circling the drain, you likely won’t be approved for a loan anyway and could just wind up with a credit pull on your report. Only refinance an auto loan if you plan on using the vehicle for a few years minimum.