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Can I Refinance My Car with the Same Lender?

Finance | 07/28/2022 22:00

Refinancing can sound like a hassle. You know there will be a lot of paperwork involved and you know you are going to spend a lot of time comparing offers. So you are probably wondering “Can I refinance my car with the same lender?” After all, that will make refinancing your car loan much easier and much simpler, won’t it?

While that may sound like the easy route to take, today we are going to talk about why you probably shouldn’t refinance your car loan with the same lender. Refinancing your loan will be more impactful if you shop around and compare to ensure that you are getting the best terms possible.

Here’s why you shouldn’t refinance your car loan with the same lender without comparing and shopping around.

Car loan application papers

How many times can you refinance your car with the same bank?

Yes, you can refinance your car with the same lender. And you can refinance your car as many times as you would like. That being said, there are some guidelines as to when you should refinance your car.

You should wait at least 6 months

You can refinance your car loan at any time, so long as the paperwork on your financing is complete (this can take up to 90 days). But experts generally suggest waiting six months before refinancing. This is because it can take between six months and one year for your credit score to bounce back from your financing. Refinancing is most impactful when your credit score has increased, so you want to wait until your score has rebounded from the hard credit inquiries.

You should have at least two years remaining on your current loan

Car loans are front loaded amortized loans. This means that in the beginning of the loan repayment you are primarily paying back the interest, and as time goes on you pay more and more towards the principal. So the closer you are to the end of your repayment period, the less you are paying in interest, therefore the less money you could potentially save. Having at least two years remaining on your loan will help ensure that you will benefit from refinancing your vehicle.

You should make sure you aren’t on the hook for huge prepayment fees

Check your existing loan contract carefully to see if there are any extreme prepayment penalties. These fees may still apply even if you are refinancing with the same lender. If you are unsure, call customer service and have them review your contract with you. 

Should you refinance with the same lender?

If the timing is right, you are probably wondering if you should refinance your car loan with the same lender. And while you technically can, there are a few reasons that should dissuade you.

There’s a lot of competition for rates

In the past, car loan refinancing was done through traditional banks. You were limited by what banks were in your area, and there really weren’t other options for you. But nowadays, there are thousands upon thousands of lenders to choose. From traditional banks to online lenders to credit unions, your options are seemingly endless.

All of these options mean one thing: more competition. And more competition means that you can get better car loan rates. By simply refinancing your loan with the same lender, you are ignoring all of the competition out there and narrowing your options.

Different lenders will prioritize different aspects of your finances, so you might have better luck with certain lenders depending on your situation. While the APR you are offered will be based in part on your credit score, your debt-to-income ratio, what type of car you are driving, and your credit utilization ratio, the way in which these are considered may vary. While one lender may put the greatest importance on your credit score, another lender may feel that your income is the most important factor. One lender may require that your car be less than 7 years old, while another lender may extend that to 10 years. So depending on your finances and your car, you might have way better luck with one lender as opposed to a different one.

There’s room to negotiate fees

If there’s more competition, it gives you a better chance to look around and save in fees. Origination fees can vary significantly between lenders, and having the ability to shop around and compare can save you a lot of money. It can also give you the chance to negotiate with lenders. 

Some fees you will be able to negotiate, while others you will not. Typically you will be able to negotiate the following:

  • Origination fees (this is essentially the cost of the loan paperwork)

  • Advertising fees

  • Shipping fees

  • Dealer prep fees

  • Market adjustment fees

Other fees such as the registration fee are non negotiable. But telling new lenders that you are shopping around (and even considering your existing lender) should give you some room to negotiate.

How do you refinance a car?

Refinancing a car is incredibly easy, especially when you use a company that specializes in refinance, like Auto Approve

Do Your Research

The first step to car loan refinance is research. You will ultimately want to apply to three to five lenders for your refinance, so you want to make educated choices. Talk to friends and loved ones to see if they have good recommendations. Read online reviews to see which lenders might be a good fit and who has good customer service. Gather all of this information and then make an informed decision on where to apply. Also make sure that your car is eligible for refinance. Some lenders have requirements about the age and mileage of the cars they refinance. 

Check–and Double Check–Your Credit

Your credit score is one of the most important factors in the car loan APR that you will be offered, so you want to be sure it is in great shape before you even apply. In the months leading up to your refinance be sure to make full, consistent, and on time payments. Try to pay down as much debt as you can and set up autopay on accounts that allow it. 

Request a copy of your credit report (you can do this three times per year for free) and be sure your report is accurate. If there are any issues or errors, report them immediately to the credit bureau. If your score isn’t better than it was during your initial financing,you might want to put off refinancing until your score has improved.

Review Your Current Terms

Make sure you are able to leave your current contract without any issues. As we mentioned before, there might be some prepayment penalties that will outweigh any savings.

Get Your Documents Together

Gather all documents you will need for your applications. You will most likely need the following to get started:

  • A Photo ID (such as a passport or driver’s license)

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

  • Proof of income and financial history (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

Scanning all of these documents into one location will make applying easier. 

Apply and Compare

Once you have your lenders picked out and have all of your documents ready, you are ready to apply. But this is when using a company like Auto Approve really pays off. They can handle all of the applications and paperwork for you (as well as helping you pick which lenders might be best in the first place). And when the offers come in they can help you compare the rates and terms. The most important thing to compare is the car loan APR, but you also want to think about prepayment penalties, fees, and how their customer service is. 

Sign and Save

After comparing all of your offers and selecting the best one for you, all that’s left to do is sign on the dotted line. If  you use Auto Approve for your car loan refinance, we will even handle the DMV paperwork for you. The new lender should handle paying off your previous loan, but be sure there are no additional steps you are required to take.

And that’s it! You can see the benefits of refinancing right away.

While you can refinance your car loan with the same lender, you should definitely shop around and compare offers from other lenders.

Refinancing your car loan may sound complicated and time consuming, but refinancing with Auto Approve makes the process simple and quick. With just a little preparation and research you could save a lot of money every month. And who couldn’t use a little extra cash in their pockets? So what are you waiting for? Contact Auto Approve and start saving today!


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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.