Thinking about refinancing your vehicle loan and want to know all the tips and tricks to make sure you get the best deal?
Time the refinance right for eligibility and a better deal
Get your paperwork in order before applying
Shop around for lenders
Apply to at least 3-5 lenders, making sure to submit all applications in the same two week window to avoid taking a bigger than necessary credit dip
Choose your best offer, taking into consider APR (annual percentage rate), any fees or penalties, and repayment periods
Or, you can make it easy by using a company like Auto Approve.
In short: Refinancing your car loan is a great way to get a better deal on your car loan, and using a company that specializes in car loan refinance is the best way to do it.
At Auto Approve, our refinance experts can help you get a preliminary quote, guide you through the process, connect your application with 50+ trusted lenders, help you read the fine print to find your best deal, then do the paperwork for you—all at no extra cost to you.
Millions of American drivers are eligible for a lower car payment, all they need is to find the right refinance. Find out if you’re one of them and get a quote for how much you could save in just 60 seconds—all for free, no commitment or hard credit check required.
Read on for a more detailed look at the refinance process, eligibility, and the best way to refinance a car loan.
When you initially financed your car, you might not have gotten the best rate, especially if you chose to get financing through your dealership.
But starting with a bad deal doesn’t mean you have to live with a less-than-great car loan rate. Refinancing your car loan is a great way to get a better car loan APR and better loan terms.
So what’s the best way to refinance, and how can you get started?
In this article, we’ll cover:
What it means to refinance a car loan
Why people choose to refinance a car
Where to refinance your car to get the best deal
The best way to refinance a car loan (broken down into steps)
Refinancing a car loan is when you replace your existing loan with a new car loan, ideally with better terms for your unique situation.
In short, refinancing is the only way to change any aspect of your loan terms.
You might choose to refinance to:
Save money by securing a lower car loan APR
Change to a longer or shorter repayment term (paying less monthly or saving overall on interest)
Add or remove a cosigner
If you are asking yourself “should I refinance my car loan?”, you can decide if refinancing your car loan is good move by asking yourself the following:
Is it possible I can find a lower car loan APR?
Am I struggling to make my monthly car payment?
If the answer is yes to either of those questions, refinancing your car loan may be a great option.
Of course, there are other reasons to refinance, like if you want to add or remove a co-borrower, or if you want to shorten the length of your loan to save overall because you have more cash on hand now or are planning to move or retire and want to finish paying off the loan. However, paying less monthly—whether through rate savings or term changes—is the most common reason people choose to refinance.
You can find a lower car loan APR if any of the following apply to you:
You got dealership financing and didn’t negotiate on the fees.
Your credit score has improved since your initial financing.
The market rate has decreased since your initial financing.
Your debt to income ratio has improved since your initial financing.
Refinancing is very beneficial when you can find a lower car loan APR. When you reduce your rate, you reduce your monthly payments and save money over the life of your loan.
If you are having a hard time making your monthly car payments, refinancing can help you change your repayment plan, which can change your monthly payments greatly.
Lengthening your repayment period allows you to repay your principal over a longer period of time, making each payment smaller. Note that you will pay more in interest (since you will be paying interest for a longer period of time), but it can be a worthwhile tradeoff if you are having trouble making ends meet every month.
That will depend on your credit, your vehicle, and the current market rates. There are many financial institutions that will refinance your car loan. Traditional banks, credit unions, and online lenders are all great options. To get the best deal on your refinance, you’ll want to shop around.
That’s why the best way to refinance your car loan is to go through a company that specializes in car loan refinance, like Auto Approve.
At Auto Approve, we work with a network of banks, credit unions, and lenders across the country, which means our trusted experts can help you shop around and compare your options quickly and easily.
If you choose to refinance your loan on your own, you will need to do a lot of research to determine where you should apply. Then, you will need to apply and compare the different terms and rates that are offered to you. When you use Auto Approve, this process is fast and easy. Auto Approve will handle all of the background work for you, so all you have to do is pick your best refinance option.
Then, once you find the vehicle refinance loan that is right for you, Auto Approve can make sure that your old loan gets paid off and that all of your paperwork is done correctly. We’ll even handle the DMV paperwork for you.
Worth noting: You can refinance your car loan through a dealership, but that is typically the most expensive option. And, while you may be able to refinance with your existing lender, that is similarly unlikely to get you a great deal.
If car loan refinance sounds like a good option for you, it’s easy to get started.
There aren’t a lot of qualifications when it comes to refinancing, but eligibility may depend on:
How old your car is
How many miles your car has on it
How much money and time is left on your existing loan
Generally, most lenders won’t approve a refinance at the very beginning or end of a loan—you’ll want to have had the loan for at least 6 months and ideally have at least two years left on the loan, so timing does matter.
If you aren’t sure if you qualify for refinancing, Auto Approve can help! Our agents can help you determine if you are eligible for refinancing (and find out how much money you could be saving).
A little preparation can go a long way when it comes to refinancing. Car loan refinancing is most beneficial when your credit score and your finances are in tip top shape.
Here are a few things you could do to ensure that your score is at its best:
Commit to making full, on-time payments.
Request a copy of your credit report and review it for any errors.
Request higher credit limits.
Avoid applying for any other lines of credit while you are in the process of refinancing.
When you feel like your finances are in order, gather your paperwork. You’ll want to have the following documents ready to go:
Your driver's license
Your SSN
Proof of address
Your car’s make, model, year, mileage, and VIN
Current proof of insurance
Current vehicle registration
Pay stubs or proof of income
Current loan information
Finances out of whack? If you are having trouble with your monthly payments, go through your monthly budget to determine what you can afford to pay. Experts recommend that your monthly transportation expenses (this includes car payments, gas, parking, maintenance, and insurance) does not exceed 20% of your monthly income.
If you are refinancing on your own, you should try to do as much research as you can. Talk to friends and family to see if they can recommend a lender. Go online and read reviews to get a sense of how competitive different lenders’ rates are and see how their customer service stacks up. You should aim to apply with 3-5 lenders, so you’ll likely want to research at least 10 options.
Or, if you use Auto Approve, we’ll handle this step for you and identify the best lenders in our network for your unique financial picture.
When you have narrowed your list down, it’s time to apply. Send out all of your applications in a two week timeframe: the credit bureaus give you two weeks where all hard inquiries will count as one hit on your credit score.
When you use Auto Approve, we quickly handle all of your applications for you so you don’t need to worry about the two week timeframe.
When your offers come in, be sure to compare all terms.
Check and compare the following:
The car loan APR
The repayment period
The assorted fees
The prepayment penalties
Once you determine the best car loan for you, all you have to do is sign and save.
At Auto Approve, we handle the paperwork for you and ensure that your previous loan gets paid off. And that’s it! Auto Approve makes refinancing your car loan as easy as possible.
The sooner you begin the refinance process, the sooner you can start saving money.
