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If you’ve visited a car dealership lately, you know how expensive new vehicles are right now. With the average price of new cars surpassing $47,000, it’s no surprise that roughly 80% of new cars were financed with auto loans.
If you have a high-interest auto loan, refinancing to get a better rate can be a smart financial decision. We researched 25 leading auto loan lenders and identified the best auto refinance loans based on their rates, fees, terms, and eligibility requirements (borrower and vehicle).
Best Auto Refinance Loans for April 2024
- Best Overall: PenFed
- Best Big Bank: PNC Bank
- Best Refinance Loan Marketplace: AUTOPAY
- Best Credit Union: Consumers Credit Union
- Best Online Lender: LightStream
- Best for Low Minimum APR: OpenRoad Lending
Depending on when you took out the loan and your credit profile, your car loan may have a high rate. According to a report by Experian, the average rate for new car loans for those with deep subprime credit—meaning a credit score between 300 and 500—was 14.08%.
Best Overall : PenFed
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PenFed Credit Union
- Refinance APR Range: 5.44%-6.79% (new); 6.49%-7.54% (used)
- Refinance Loan Amounts: $500–$150,000
- Refinance Loan Terms: 36–84 months
Loans can be funded on the same day you apply
Low loan minimum
Low rates
Finance up to 125% of vehicle’s value
Membership open to the public
Longer loan terms have different restrictions
Cannot refinance an existing PenFed loan
Must join credit union
PenFed is our top auto loan refinance lender for a variety of reasons. Most lenders will take at least a day to disburse your loan funds, but PenFed Credit Union is fast. According to customer support, your auto loan funds can be sent the same day you apply.
PenFed allows a broad range of loan amounts and you can refinance from as little as $500 to as much as $150,000. Its minimum rates are almost as low as they come, giving you a chance to refinance and save a lot of money if you have good credit.
Another perk is that PenFed offers refinancing for up to 125% of the vehicle’s value. You can use this to borrow against your car and get cash for upcoming expenses or to consolidate high-interest debt.
While some credit unions are limited to select groups, the credit union's membership is open to the general public. You can join PenFed by opening a savings account with as little as $5, and PenFed will even provide the funds if you’re approved for an auto loan.
PenFed’s auto loan refinancing program cannot be used to refinance an existing PenFed loan. And if you opt for a longer loan term, such as 84 months, you’ll pay a significantly higher interest rate.
- Loans are available in all 50 states, D.C., and select U.S. territories
- Does not disclose a minimum credit score
- Borrower must join PenFed Credit Union, which requires a $5 deposit into a PenFed savings account (PenFed will provide the $5 if you’re approved)
PenFed does not disclose its income or credit requirements, but it does allow you to pre-qualify for a loan and view your options without affecting your credit score.
- For loans less than seven years: No limit on vehicle age; must have 125,000 miles or fewer
- For loans of seven years or more: Vehicle must be less than five years old and be under 60,000 miles
- Maximum loan-to-value ratio: 125%
- Allows private-party vehicle purchases: Yes
Best Big Bank : PNC Bank
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PNC Bank logo
- Refinance APR Range: 6.84%–13.49%
- Refinance Loan Amounts: $5,000–$100,000
- Refinance Loan Terms: 12–84 months
Co-applicants permitted
Loan amounts up to $100,000
Financial hardship options
High-mileage cars ineligible for refinancing
Unclear fees and penalties
Good to excellent credit required
Many borrowers like the comfort of working with a large bank to take out a loan. When you borrow from a major bank like PNC, you know that the lender is reputable and reliable. If you’re an existing customer, you may be eligible for discounts or other benefits.
Customers can refinance their auto loans and qualify for competitive rates with PNC Bank. And if you sign up for automatic payments with a PNC checking account, you can qualify for a 0.25% interest rate reduction.
PNC also has hardship options for borrowers who experience financial difficulties like unemployment, illness, or other unexpected life events. You may be eligible for a loan modification that makes your payments more affordable, or other solutions.
- Auto refinance loans are only available in the 29 states where the lender has physical branches.
- Lender does not disclose minimum credit score or income requirements.
- Borrower must provide two-year employment history and income information.
PNC’s annual report showed that the majority of approved auto loan borrowers had a score of 780 or higher.
- Maximum accepted vehicle age: 8 years
- Maximum accepted mileage: 80,000 miles (borrowers with excellent credit may be able to refinance vehicles with mileages as high as 100,000)
- Maximum loan-to-value ratio: 115%
- Allows private-party vehicle purchases: Yes
Best Refinance Loan Marketplace : AUTOPAY
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AutoPay
- Refinance APR Range: As low as 4.67%
- Refinance Loan Amounts: $2,500–$100,000
- Refinance Loan Terms: 24–96 months
Accepts a wide range of credit levels
Multiple refinance options
Allows co-applicants
Does not disclose eligibility requirements
Origination fees may apply
Shopping around for auto loan refinancing can be time-consuming, but AUTOPAY can simplify the process. After you fill out just one form, AUTOPAY connects you with offers from its partner lenders. If you have good credit, you may be offered some very low rates. Lenders have competitive rates and terms as long as 96 months.
AUTOPAY offers flexible loan amounts with fairly low minimums; you can borrow as little as $2,500. And AUTOPAY’s partners provide the following refinancing options:
- Traditional refinance: The traditional refinance loan may help you lower your interest rate or reduce your monthly payments.
- Cash-out refinance: With a cash-out refinance loan, you can borrow more than you owe on your vehicle. Through AUTOPAY’s partners, you can get up to $12,000 cash back to cover other debt or expenses.
- Lease buyout: A lease buyout loan allows you to pay off your lease early and keep your vehicle at the end of your base term.
Loan terms, rates, and fees vary by lender, but many of AUTOPAY’s partners charge origination fees.
While some lenders offer loan terms as long as 96 months on refinanced auto loans, think twice before opting for such a long term because you’ll pay much more in interest. Use our auto loan calculator to see how your loan term affects your total repayment cost.
- Recommened credit score of 500 or higher
- Available in all U.S. states and Washington, D.C.
- Maximum accepted vehicle age: 10 years
- Maximum accepted mileage: 150,000 miles
- Maximum loan-to-value ratio: Not disclosed
- Allows private-party vehicle purchases: Yes
Best Credit Union : Consumers Credit Union
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- Refinance APR Range: Starting at 6.54%
- Refinance Loan Amounts: $500–$350,000
- Refinance Loan Terms: 60–84 months
Autopay discounts
Loan options for motorcycles and other vehicles
Membership not required for a loan (according to customer support), but open to the general public
Unclear borrower requirements
Must provide Social Security number to view rates
Higher rates for older cars
Credit unions are nonprofit organizations that can be excellent resources for loans. Because they’re nonprofits, they often have lower rates and fees than other lenders.
Members can qualify for a 0.25% rate reduction. Consumers Credit Union will refinance more than just your typical car or truck as it also offers refinancing for motorcycles and recreational vehicles.
Some credit unions have strict membership requirements, but this one doesn’t require membership for auto loans. To join, you can pay $5 to the credit union’s sponsor, the Consumers Cooperative Association, and deposit and maintain a minimum balance of at least $5 in a Consumers Credit Union savings account.
Consumers Credit Union doesn’t disclose its minimum credit score and income requirements. And to view rates, you must provide your Social Security number.
- Maximum accepted vehicle age: None
- Maximum accepted mileage: None
- Maximum loan-to-value ratio: 125%
- Allows private-party vehicle purchases: No
Best Online Lender : LightStream
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LightStream
- Refinance APR Range: 7.74%–15.94%* with autopay
- Refinance Loan Amounts: $5,000–$100,000
- Refinance Loan Terms: 2–7 years
Quick loan funding
No appraisals
No restrictions on vehicle age or mileage
Higher interest rates
Very good to excellent credit required
Cannot refinance LightStream loans
LightStream could be a good choice for borrowers who want a quick and easy refinancing option. It's also a good choice for those who own older or high-mileage vehicles. These loans are similar to personal loans, which means they’re unsecured. As such, they have higher rates than you may find elsewhere,
LightStream doesn’t have any limitations for vehicle age, model, or mileage, and the application process won’t be as rigorous. Plus, it boasts rapid loan disbursements. You could receive the loan funds as soon as the same day you apply.
Not everyone can qualify for a loan through LightStream. The lender typically only accepts borrowers with very good to excellent credit, but you can apply with a co-applicant to improve your odds of qualifying for a loan.
- Must be the age of majority in your state
- Must have a verifiable source of income
- Available in all 50 states and Washington, D.C.
- Maximum accepted vehicle age: No maximum
- Maximum accepted mileage: No maximum
- Maximum loan-to-value ratio: No maximum
- Allows private-party vehicle purchases: Yes
Best for Low Minimum APR : OpenRoad Lending
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OpenRoad Lending
- Refinance APR Range: 1.99%–24.99%
- Refinance Loan Amounts: $7,500–$100,000
- Refinance Loan Terms: 24–72 months
Low APRs available
Works with borrowers with fair credit
High maximum mileage
Will not work with self-employed borrowers
May charge origination fees
Not available in all states
Since its launch in 2009, OpenRoad Lending has grown to provide auto loan and refinancing options. Through its network of lenders, borrowers with fair credit can qualify for loans, while applicants with the best credit may qualify for extremely low rates. And while some lenders limit refinancing to vehicles with 80,000 miles or less, OpenRoad offers refinancing for vehicles with mileages as high as 160,000 miles.
OpenRoad Lending has some unusual drawbacks. It isn’t available nationwide, and it will not work with self-employed borrowers. And income from Uber or other rideshare companies does not count towards OpenRoad Lending’s income requirements.
- Minimum credit score of 500
- Must be at least 18 years old
- Available to residents in 46 U.S. states
- Must make at least $2,000 per month (earnings from Uber or similar services do not count toward the income requirement)
- Your DTI cannot exceed 40%
- Can only refinance auto loans issued by NCUA- or FDIC-insured lenders such as credit unions and banks
- Maximum accepted vehicle age: Eight years
- Maximum accepted mileage: 140,000 miles
- Maximum loan-to-value ratio: 175%
- Allows private-party vehicle purchases: No
- Vehicle restrictions apply, including the exclusion of commercial vehicles, Oldsmobile, Daewoo, Hummers, Saab, Suzuki, and Isuzu models
The Bottom Line
Refinancing an existing auto loan can be a good way to save money or lower your monthly payments. The best auto refinance loans offer competitive interest rates and allow you to customize your loan term to meet your budget.
PenFed is our recommended first stop. Anyone can join this credit union and its rates and terms make it worth the effort. If you want the security of a big bank, PNC allows you to refinance up to $100,000, and you can have as long as seven years to repay the loan. For those who want a cash-out refinance option or a variety of offers, AUTOPAY is a marketplace that lets you view rates from multiple lenders.
When evaluating your options, it’s wise to get quotes from multiple lenders so you can find the lowest auto loan refinance rates based on your creditworthiness. Getting a good auto loan doesn’t have to take long, but it’ll pay to explore your options.
Auto loan refinancing scams are common. Red flags to watch out for include upfront enrollment fees or advising you to stop making payments on your existing loan.
Auto Loan Rates by Credit Score
| Credit Score | Average APR (New Car) | Average APR (Used Car) |
|---|---|---|
| Super Prime: 720+ | 5.18% | 6.79% |
| Prime: 660-719 | 6.40% | 8.75% |
| Non-prime: 620-659 | 8.86% | 13.28% |
| Subprime: 580-619 | 11.53% | 18.55% |
| Deep Subprime: 579 and below | 14.08% | 21.32% |
Source: Experian: What Auto Loan Rate Can You Qualify for Based on Your Credit Score?
Guide to Choosing the Best Auto Refinance Loan
When to Refinance Your Auto Loan
By refinancing your auto loan, you can replace your existing loan with a new one with different terms. Auto loan refinancing can be advantageous in the following scenarios:
- Your credit has improved since you took out the original loan: Auto loan rates are largely dependent on the borrower’s credit score. If you had less-than-perfect credit when you took out the loan, you could have an interest rate in the double digits. But if your credit score has improved since then, you could refinance and qualify for a better rate.
- You can’t afford your payments: If your payments are too high for your budget, refinancing with a longer-term loan could make your payments more affordable.
- Interest rates dropped: Car loan interest rates can fluctuate. If rates have dropped since you took out your loan, you could refinance and qualify for a lower rate, even if your credit hasn’t changed significantly.
Refinancing isn’t for everyone, particularly if you’re in one of the following scenarios:
- Your lender charges a prepayment penalty: Prepayment penalties vary by lender and state law. If the lender charges a prepayment penalty, the cost of that penalty may negate the savings you’d get from refinancing.
- Rates are similar to what you have: Auto loan refinancing can be a lengthy process, and you may have to pay origination fees or other costs. If the interest rates are similar to what you have now, refinancing may not be an effective way to save money.
Auto Refinance Loans: Factors to Consider
When comparing auto refinance lenders, keep the following factors in mind:
- Loan terms: In general, auto refinancing loans have terms between two and seven years. The longer the term, the lower the monthly payment, but you’ll likely pay more in interest over time. Lenders usually give the lowest rates to borrowers who opt for shorter loan terms, such as two or three years.
- Added fees: Auto refinancing can involve fees like origination fees, prepayment penalties, and registration or documentary stamp fees.
- Interest rates: Interest rates are based on your credit, income, car year, make and model, and the selected loan term. Rates vary by lender.
- Restrictions: Lenders typically restrict the vehicles that are eligible for refinancing. For example, they may only allow vehicles with less than 100,000 miles or cars that are 8 years old or newer.
If you can’t afford your auto loan payments, contact your lender right away. You may be eligible for a loan modification or payment deferral.
How to Refinance Your Auto Loan
Refinancing an auto loan is usually more time-consuming than refinancing an unsecured personal loan or student loan. Because auto loans are secured, there are some extra steps you need to complete.
Shop around: Rates, terms, and fees vary by lender, so shop around and request quotes from multiple companies.
Fill out an application: Once you find a lender, you can complete an application. Many lenders allow you to apply online, but you’ll need to provide the following documents:
- Driver’s license
- Proof of car insurance
- Proof of income
- Vehicle registration
- Vehicle title, for cash-out refinancing
- Payoff letter from existing lender
- Vehicle identification number (VIN)
Review terms: The lender will review your application and assign your vehicle a value based on industry data. If the lender approves your application, it will send you a loan agreement that outlines the loan terms and fees.
Sign the agreement: Carefully review the loan agreement, paying particular attention to origination fees and prepayment penalties. If everything looks good to you, sign the agreement and return it to the lender. The lender will pay off your existing loan for you, and will send you instructions on how to make payments toward the new loan.
Frequently Asked Questions
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When Can You Refinance Your Car Loan?
Although you can refinance immediately after buying your vehicle if you’d like, it may not make sense to refinance so soon. Every time you apply for a loan, your credit score will dip, and taking out a new loan can cause your score to decrease. Instead, it may be a better idea to wait a few months to improve your credit and establish a positive payment history before exploring your refinancing options.
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How Many Times Can You Refinance Your Auto Loan?
There isn’t a limit on how many times you can refinance an auto loan. However, refinancing may involve origination fees and transfer fees, so it may not be a financially wise decision. And it also can be a time-consuming process; refinancing can take about two weeks to complete in some cases.
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Can You Refinance If You Owe More Than What the Car Is Worth?
Generally, lenders determine how much you can borrow based on your car’s current value. If you owe more on your existing loan than your car is worth, you may find that fewer lenders are willing to work with you. Because you’re upside-down on the loan, there is more risk to the lender; if you default on the loan, the lender would get a smaller amount back by selling the car and incur a loss. Some lenders will refinance cars that are worth less than the outstanding loan amount, but they typically charge much higher rates.
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Does Refinancing Your Car Loan Hurt Your Credit Score?
Refinancing a car loan can affect your credit score in the following ways:
- New credit inquiry: As you shop for a loan and lenders review your credit, each hard credit inquiry that occurs can cause your score to decrease by several points.
- New account: If you refinance your loan, the new loan may cause your score to drop. That’s because new credit accounts for 10% of your FICO credit score.
However, the impact to your credit is temporary. Over time, you can improve your score by making the payments on your new loan on time every month. And the money you save by refinancing at a lower rate is typically worth the minor credit damage.
Methodology
Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of auto loan lenders. To rate providers, we collected hundreds of data points across more than 20 auto loan lenders, including interest rates, fees, loan amounts, borrower requirements, and vehicle requirements, to ensure that our reviews help users make informed decisions for their borrowing needs. We also conducted a survey of 1,016 auto loan borrowers for attitudes and opinions about lenders and the loan process.
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