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How Do You Apply For An Auto Refinance?

Finance | 03/10/2022 23:00

We know that an auto refinance can save you a ton of money. We know that it can lessen your monthly payments and give you some breathing room. And we know that it’s a great way to change any terms in your car loan that aren’t beneficial to you. 

But how do you apply for an auto refinance? Today we are talking about the process of applying for an auto refinance and getting into the nitty gritty details. 


The Steps You Need To Take to Refinance Your Auto Loan

The good news is that it’s actually really easy to refinance. Auto loan refinancing is actually much simpler than mortgage refinancing, and can easily be done in a few hours. As with everything, preparation is key. So let’s get into the steps you need to take to refinance your car loan.


Review your current loan

Look at your current loan contract and review your current terms. Make sure you know the following:

  • Current monthly payment 

  • The remaining balance

  • The amount of time left to repay the loan in months (the loan term)

  • The interest rate 


Additionally, make sure you are aware of any penalties for which you may be responsible. Some car loans have prepayment penalties that you will be responsible for if you end your contract early. Call your lender directly if you have any questions or want to review any of the fine print. Knowing your current loan terms will help you decide if a car loan refinance is worth it.


Collect your documents

When you apply for an auto refinance, you will need to have all of your documents in order. Gather the following so you are as prepared as possible:

  • A Photo ID, such as a passport or driver’s license.

  • Your vehicle’s information, which may include the bill of sale, VIN number, make, model, and year of your car.

  • Proof of income and financial history, which may include pay stubs, banking information, and your credit report.  

  • Proof of residence, such as a mortgage statement, lease agreement, or utility bill. Note that PO boxes are not acceptable as proof of residence.

  • Proof of insurance. 


If you are applying online, scan and upload all of your files so they are easy to access.


Check your credit score and report

The car loan APR that you are offered will depend heavily on your credit score, so you want to make sure that your credit score is in good shape. Request a copy of your credit report (which you can do once per year for free) and review it carefully for any errors or mistakes. Be sure that everything is accurate and up to date on your report. You can petition the credit bureau if there are any inconsistencies or errors. Remember, the higher your credit score is, the lower your rate will be. Being thorough in your credit report review can save you a lot of money. 


Research lenders

While you will not have any offers to compare until you actually apply, you can do initial research to decide which lenders will be beneficial. Look around online for different credit unions, traditional banks, and online lenders. See what some of the average rate offers are, and look carefully at the customer satisfaction ratings. We recommend applying to three to five different lenders. 


To simplify this, you can use a company that specializes in auto refinance, like Auto Approve. We have existing relationships with the best lenders across the country, so you don’t need to research a million companies to know that you are getting the best deal around. All you need to do is fill out your information, and we handle the rest!


Apply to lenders

Be sure to apply to all of your lenders within a fourteen day period. This will ensure that all credit inquiries only count as one hit on your credit report. (If you use Auto Approve, we take care of all of this!)


Compare your offers

When the refinance offers start coming in, compare all of the rates and terms. 

  • What is the interest rate being offered? 

  • What is the repayment period?

  • Are there prepayment penalties? There is no limit to the amount of times that you can refinance, so make sure you don’t agree to prepayment terms that you may regret in the future.

  • Does the lender have good customer reviews? Do customers seem happy with their communication and transparency?


Do the math and be sure that your new savings will offset any prepayment penalties for which you may be responsible.


Sign and Start Saving Money

Once you have compared all of your offers and picked the best car refinancing option, simply sign on the dotted line and start seeing the benefits of refinancing immediately. (And if you use AutoApprove to refinance your car loan, we will even handle the boring DMV paperwork so you don’t have to!) 


How Do I Know If my Interest Rate is Good on my Auto Loan Refinance?

The main benefit of auto loan refinance is that you can secure a lower car loan APR and save a lot of money. You should consider refinancing in the following situations:

  • When interest rates are low. Interest rates are adjusted based on how the economy is performing. If the economy is not performing well, or is anticipated to not perform well, banks will lower their interest rates to encourage spending. If interest rates are lower than when you first took out your auto loan, it may be a good time to consider refinancing. (Hint: rates are low now, so it’s a good time to refinance)

  • When your credit score has improved. Your credit score is a major factor in the car loan APR you will be offered. The most favorable rates and terms are given to those with very good and excellent credit. Even if your score has increased within your bracket, but you haven’t crossed into a better category, it still might be worth getting a few quotes and seeing if you can get a better rate. 

  • When your income has decreased or your expenses have increased. If money is tight, refinancing can provide some much needed breathing room. You can either get a lower car loan APR which will automatically reduce your monthly payments, or you can lengthen your payment period so that you will pay off the loan over a longer period of time (therefore reducing your monthly payments). Either way this can free up your monthly budget.


Auto refinance sounds like a good option, but how do you know if your interest rate is good? 


The quick and easy way to know if your auto loan refinance rate is good is to ask yourself, “is this auto loan refinance rate lower than my existing rate?” If it is lower, then it’s probably worth refinancing. Always be sure to do the math to determine how much money you will save over the course of the loan repayment term. 


The car loan APR that you are offered depends on a number of factors:

  • Your credit score. Your credit score tells lenders how likely you are to repay your loan, and repay it on time. There is no magic number, but the higher your score is, the better your offered rate will be. 

  • Your income. Lenders consider what’s called your debt to income ratio (DTI) which compares your monthly debt payments to your monthly income. The lower the ratio, the better your rate will be.

  • Your vehicle. Lenders look at your car’s loan-to-value ratio (LTV) calculation to determine if your vehicle qualifies for refinancing. The LTV will help lenders decide if they can recoup their losses should you default and they need to resell your car.


Lenders consider all of these factors to determine if you qualify for an auto loan refinance and what car loan APR you should be offered. 


What Are The Best Auto Refinance Interest Rates Today?

The auto loan refinance rates are still incredibly low right now. So if you want to get the best auto refinance rates, you should consider refinancing as soon as possible.


The Fed has announced that it will be increasing interest rates throughout 2022, so the sooner you refinance, the better. You can get the best rates by shopping around and doing your research. But we can save you a lot of work and hassle by handling this for you. All you need to do is collect your documents and answer some simple questions, and we will handle the rest! So if you are looking for the best auto refinance rates today, look no further than Auto Approve.

And that’s how you apply for an auto refinance.


The time has never been better to refinance your car with Auto Approve. But don’t just take our word for it. With a 96% would recommend rating on LendingTree and an A+ rating from the Better Business Bureau, you know you are in good hands. So don’t wait any longer! 

GET A QUOTE IN 60 SECONDS

More Resources

What Are Tariffs And Why Do They Matter For American Cars?

It looks like tariffs – or at least the looming possibility of tariffs – are here to stay. But how do they work? And how can tariffs affect car prices? Let’s take a quick look at everything you need to know about car tariffs: meaning, how they work, and what to expect if you’re hoping to purchase or repair a vehicle.All About Car Tariffs (and How They Could Affect You)Let’s start with the basics.What are tariffs?You may have heard the word a lot lately, but what exactly does “tariff” mean?The simplest explanation is this: a tariff is a tax that is charged on something when it is imported. Think of it like the sales tax on a purchase when you check out at a store. It’s typically a percent of the total you’ve already paid on top of your bill. This money goes, as a tax, to the government.Here’s a practical example of how tariffs work.For example, let’s say you’re a ketchup maker. 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But being prepared for a possible rise in cost is only prudent as the U.S. tariffs cars.Get the best auto loan for your budgetPrices may rise and fall, but getting a better deal on your car payment by refinancing with Auto Approve is just about always a good idea. Discover whether you’re eligible for a lower monthly payment in a few clicks – no commitment required.Get your free quote now.

Refinancing A Vehicle in 2025: Your Guide

Spring is a great time to think about making changes and refreshing your life – from spring cleaning to getting outdoors more. But it can also be a great time to check in with your finances. Right now especially, money is tight for a lot of average folks in the U.S., thanks to rising grocery and gas prices. If you have a car that is financed, you may be wondering whether a car loan refinance could help you save some cash. Here’s how you can tell if you should refinance your car loan in 2025. What is car loan refinancing?Car loan refinancing is when you get a new car loan that will replace your existing loan. Refinancing a loan will help you to get a better interest rate, change your repayment period, and change who is or is not a cosigner on the loan.When you refinance your loan you will go through the same process as you did during your initial financing. You will research lenders, apply for a loan, and select the loan that has the best terms, conditions, and car loan interest rate. And that’s it! It’s incredibly simple, and there are companies out there like Auto Approve who can help you navigate the world of refinance and help you through the application process. When you select a loan that is right for you, your new lender will pay off your old loan directly and you will begin making payments to your new lender. And voila–your loan is refinanced and you can start saving money immediately. When should you refinance your car loan?There are a number of signs that the time is right to refinance your car loan. Make sure you know the terms and conditions of your existing loan before you decide whether to refinance, as it’ll help ensure that the new loan you get will be better.Your credit score has improved.The car loan APR that you are offered is very dependent on your credit score. In fact, your credit score is the biggest factor that you have control over when it comes to securing a loan. The rate that you are offered will be based on which credit tier you are in. 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You will likely be paying more interest over the life of the loan, but this may be worth it if it can make your monthly budget work for you. In general, if something big is happening (like a wedding or a personal emergency) and you need a little breathing room, refinancing may be a help – as well as lowering your monthly rate or overall interest, refinancing often means a few months’ break from paying while you make the switch.You are in a bad relationship with your current lender.Sometimes we end up in bad relationships. Maybe you don’t like the customer service and have had a few too many bad interactions. Maybe they have hit you with fees and penalties that you do not find fair. Maybe they have been unresponsive and unhelpful. 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A utility bill is usually sufficient for this.  Your car’s registration.Your vehicle’s information: model, make, year and vehicle identification number (VIN)Your current lender’s information and loan information, including the payoff amount.A photo of your car’s odometer Some lenders may require more information or paperwork, but these are the standard documents that most lenders will want. Is 2025 a good time to refinance my car loan?So is now a good time for car loan refinance? It really depends on your situation. Market rates are not exceptionally low, but they have fallen a bit since their peak in 2023-24. But more importantly, global circumstances might not matter for your unique situation. The rates might be lower than when you originally financed, or you might be eligible for a better interest rate than you were previously.  The best thing you can do is to look at your finances and determine if you could benefit from car loan refinance. Additionally, the rapidly changing car tariff situation makes planning to purchase a new car a bit confusing right now, so those who have the option to hold onto a vehicle a little longer rather than worry about car prices might be wise to do so – for example, if you’re thinking about an auto lease buyback. That’s how you can know if car loan refinancing is right for you in 2025. Think a car refinance might be right for you? Get your free, no-commitment quote from Auto Approve today to find out how much money you could be saving!GET A QUOTE IN 60 SECONDS

Manage Your Money Better in 2025: 5 Things Financial Advisors Wish You'd Do

Want to know how you can improve your money management? If you’re looking to make smarter financial decisions this year, take a peek at these common suggestions from financial advisors. The reality is, as of 2022, the federal reserve reported that roughly half of Americans hadn’t saved for retirement at all and the combined household debt of all Americans rose to over $18 trillion in 2024.While reckless spending or avoiding thinking about money can feel good in the short term, taking control of your finances means a better quality of life and lower stress levels in the long run.Plus, better budgeting can mean more money in your pocket for the things that really matter. One way to spend smarter and save? Refinance your vehicle loan with Auto Approve and find a rate that works for you.Shore Up Your Personal Finances with These TipsEach of these suggestions comes from reliable online sources in the money management world. 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Manage debt thoughtfullyMost finance folks would agree that there is good debt and bad debt. Good debt typically includes debt that acts as an investment in your future – think student loans and mortgages. Bad debt includes things like payday loans and credit card debt – high interest borrowing that can get you caught in a debt cycle. These debts can drag you down financially without offering much benefit to you in the long term.Paying down a credit card every month and building your credit can be a good thing, but be careful about borrowing for discretionary purposes like vacations. If you’re someone who has struggled with debt, there are tons of resources available to help you figure out how to set yourself up for success in terms of paying down your debt and getting your finances back on track.5. Pay attention to your spendingAs well as keeping a broad budget, it’s always a good idea to actually audit your individual costs, especially if money is tight. You can save money at the grocery store, at the pump, and throughout your budget with a little bit of care and attention. Subscriptions and other recurring fees are one of the easiest places to get dinged by forgetting about a free trial or not noticing the creep up of a monthly bill. If you want to reduce your spending, you can look for forgotten subscriptions, see if there are ways to get your bill lowered, or cancel certain subscriptions until you need them.You may also be able to lower your monthly expenses by lowering your payments on leases and mortgages through refinancing. At Auto Approve, we work with you to find the best deal for you on your vehicle loan refinance. Then we do the paperwork for you, making it easy switch loan providers. Most people are overpaying on their auto loan, because car dealerships typically markup their rates. That means, if you got your loan through a dealership, you’re likely eligible to pay less per month with a lower rate.Get Your Finances In Tip-Top Shape With These Money Management TipsMoney matters don’t have to be difficult or intimidating. The best thing you can do for your financial health is to take a close look at what you’re earning, what you’re spending, and how you’re spending it. Once you’re intimately familiar with your personal finances, you can take charge and make sure your money is working for you, today and for years to come.Consider saving for your future, keeping a close eye on your budget, investing wisely, avoiding or paying down bad debt, and exercising discretion in your spending. With thoughtful application of these tips, guided by your financial advisor, your finances can be healthier than ever.Want to Lower your monthly car payment?Take charge of one monthly expense right now. Find out how much you could save on your car loan by refinancing with Auto Approve today. Getting a quote only takes a few minutes, costs nothing, and requires zero commitment.Get your free quote now.
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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 5.49% 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 5775 Wayzata Blvd, Suite 700 #3327 St. Louis Park, MN 55416-1233. 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.