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Factors to Consider When Choosing an Auto Refinance Company

Finance | 05/11/2022 22:00
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Picking an auto refinance company can feel overwhelming. With so much information out there, it’s hard to even know where to start sometimes. That’s why today we are discussing what factors you should consider when choosing an auto refinance company, and how you can make sure you get the best car refinance deal possible.

Here’s everything you need to consider when choosing an auto refinance company.

Where Can I Refinance My Car Loan?

First things first; who can refinance my car loan? You have four basic options when it comes to a lender that will refinance your car loan: a traditional bank, a credit union, a dealership, and an online lender. Let’s look at the pros and cons of each of these.

Traditional Banks

The Pros: Refinancing your car loan through a traditional bank can be relatively easy (so long as the bank of your choice actually does refinancing – some traditional banks do not offer personal loans like this anymore). Since traditional banks are so large, they can often offer the lowest and most competitive rates for your car loan refinance. 

The Cons: Traditional banks tend to have very strict requirements and may not be as willing to work with you as other lenders. Their applications tend to be lengthier and their credit score requirements are more aggressive. 

Credit Unions

The Pros: Since credit unions are smaller, they can often work with you more to bend the application rules and requirements. They are designed to help a core group of customers, so they have more leeway than larger banks have to make exceptions. 

The Cons: While they will be able to work with your unique situation better than a traditional bank, you will most likely not get the best rate out there. It will be easier to secure an auto loan, but it might not be the ideal terms you were seeking.


The Pros: Refinancing at a car dealership is incredibly easy, especially if you have your initial financing there.

The Cons: Refinancing through a dealership will almost never secure you a low car loan APR. This is because car dealerships act as intermediaries and tack on additional fees to the deals that are offered by the lenders.

Online Refinance Companies

Online auto refinance companies are probably your best bet when it comes to getting the best deal while keeping the process simple and to the point.

At Auto Approve, auto refinance is our specialty. And because it’s our specialty, we make the process super easy and the point. All you have to do is fill out some basic information, and we take care of the rest. We have relationships with top lenders across the country – including a mix of banks and credit unions – so we can get you the best rates around. 

It takes a lot of time and research to comb through the hundreds and thousands of lenders that can refinance your car loan. So a one stop shop like Auto Approve can make your life much, much simpler by handling all of that legwork for you. And bonus: we even handle the nitty gritty paperwork for you (yes, even the DMV paperwork).

What Factors Should I Compare When Choosing an Auto Refinance Company?

When researching auto refinance companies, there are a few things you want to compare. When you have offers to compare, be sure to look at the following.


The point of refinancing your car loan is to save you money, and securing a lower car loan APR is the key to that. The car loan APR you are offered will be based on:


  • The market rates

  • Your income

  • Your vehicle

  • Your credit score

Your credit score is the most important factor when it comes to the car loan APR you will be offered, so make sure your credit report is accurate and up to date and that you are making consistent on time payments to your accounts.

The market rates have a significant effect on the car loan APR you will be offered as well. If the market rates are lower now than when you initially financed, you will likely qualify for a lower APR.

The Terms of the Loan: Short Term vs. Long Term

You will most likely have an option for the repayment period of your loan. A short term loan is great when it comes to maximizing your savings. By having a shorter repayment period, you will pay interest over less time and therefore save more money. You will most likely be offered a lower car loan APR for a short term lease. If you choose a longer repayment period your car loan payments will be much less every month, as your payments will be spread out over a longer period of time. But you will not save as much money in the long run, as you will be paying interest over a longer period of time and you will most likely be offered a slightly higher car loan APR when compared to the short term loan.

The Fees

Different lenders have different fees that they charge to refinance your car loan. This will vary from lender to lender but may include the following:

  • The prepayment fee. Some lenders charge fees for paying off your loan early. 

  • The processing fee. Both your current lender and new lender may charge you a processing fee.

  • The registration fee. You may be required to re-register your car when you refinance your car loan. This will vary from state to state.

  • The title transfer fee. Some states may charge a title transfer fee, even though the title is just moving from one lender to another. 

Be sure to ask your lender about these fees and be sure you understand what hidden fees may be in your agreement.

The Customer Ratings

Customer satisfaction is very important when it comes to choosing a car refinance company. Are they transparent with how your payments are allocated? How is their communication? Do customers seem happy with their deals? Reading customer reviews can provide you a great deal of insight. Be sure to read it all, the good and the bad, to determine if this lender is a good match for you.

At Auto Approve, we know how important customer satisfaction is. That’s why we go above and beyond to make sure each customer has a positive experience. But don’t just take our word for it. With over 2200 five star reviews on TrustPilot, you can rest assured that our clients are happy.

When Should I Refinance My Car Loan?

Interest rates have dropped since you initially financed

If interest rates have dropped since you initially applied for financing, you may be eligible for a much lower car loan APR. In the past two years car loan rates have dropped drastically, so chances are you can be saving a lot of money every month by refinancing your auto loan.

Your credit score has improved

If your credit score has improved since your initial financing, you may be eligible for a lower car loan APR. Sometimes the difference of ten or twenty points can be the difference between a good car loan APR and a great car loan APR. And that can translate to saving hundreds of dollars. Check your credit score and credit report to see how you compare.

Your debt-to-income ratio has improved

Your debt-to-income ratio can also affect the car loan APR that you are offered. Whether your income has increased or your debts have decreased, this can help you to secure a better car loan APR.

You got into a bad deal in the first place

If you got talked into a bad financing deal in the first place, it’s probably time to refinance your car loan. Dealership financing is notoriously predatory, so if a smooth talking salesman talked you into a high APR or unfavorable repayment terms, refinancing your car loan is probably a good bet.

You need extra money every month

If things are a little tight every month, refinancing your car loan can give you a bit of breathing room. You can reduce the APR you are paying, which can save you money every month. You can also change your repayment terms when you refinance your car. By stretching out your repayment period over a longer period of time, you can reduce your monthly payments by hundreds. You may end up paying more in the long run, but it might be a good option for you if your budget is tight.

And that’s everything you need to think about when choosing an auto refinance company.

There’s a lot to think about when it comes to refinancing, and deciding which company is the best for your car loan refinancing can feel overwhelming. That’s why choosing a company that specializes in car loan refinancing can make the process much easier. All you need to do is fill out some information, and we can handle the rest. So don’t wait any longer – get started with Auto Approve today and discover how much money you could be saving!


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*APR and Fees Disclosure: Auto Approve works to find you the best Annual Percentage Rate (APR), which is based on factors like your credit history, vehicle and desired payment terms. Fees to complete your loan refinance vary by state and lender; they generally include admin fees, doc fees, DMV and title. Advertised 6.24% APR based on: 2019 model year or newer vehicle, 730 minimum FICO credit score, and loan term up to 72 months. All loans subject to credit and lender approval.
Auto Approve has an A+ rating with the BBB and is located at 2860 Vicksburg Lane North Plymouth, MN 55447. Auto Approve works to find its customers the best terms and APR, which are based on factors like credit history, vehicle, and desired payment terms. Loan amounts, costs, and fees vary by state and lender; they generally include admin fees, doc fees, DMV, and title fees, depending on the lender and period of repayment. There is no fee to obtain a quote and all refinancing-related costs are included in the amount financed so there are no out-of-pocket costs! For more information, please go to AutoApprove.com.