Refinance Your Car Loan for Lower Rates and Better Terms

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Is your current auto loan serving your needs, or do you find yourself wishing that you had applied for a different financing product? If your situation has changed since you took out your original car loan, refinancing your auto loan could help you save money or benefit you in other ways.

In this guide, we will talk about the potential benefits of refinancing along with how you can decide whether or not this is the best time to refinance. In the chart below, you can view our recommended lenders for auto loan refinancing online.

Best Car Loan Refinance with Bad Credit

Amounts
Up to $40,000
APR
Starting at 5.99%
Bad credit
Allowed
Loan Terms
2 months to 5 years
Amounts
Up to $35,000
APR
Starting at 5.99%
Bad credit
Allowed
Loan Terms
3 months to 6 years
Amounts
Up to $35,000
APR
Starting at 6.90%
Bad credit
Allowed
Loan Terms
2 months to 7 years
Use car as collateral
Possible
« Show more alternatives »

Why Refinance an Auto Loan?

Should i refinance my car? Refinancing an auto loan can have a range of benefits. Some of these include:

  • Lower interest rates. If you are paying a high interest rate now, refinancing may be able to help you reduce your future interest payments. This could save you a significant amount of money over the lifetime of your auto loan.
  • A longer or shorter loan term. If you want to pay for a longer or shorter amount of time on your vehicle, refinancing makes that possible.
  • Change other terms governing your auto loan. Sometimes, you might benefit from adjusting other terms governing your loan through a refinance.
  • Get a new lender. If you have fallen out with your current lender or are no longer happy with their practices or services, being able to switch to a completely different company to deal with could be a benefit in and of itself.

Is This the Right Time to Refinance a Car Loan?

While there are many different scenarios which might call for refinancing, here are some common examples of situations where refinancing would make sense.

1. Your credit score has improved.

If your credit score is higher now than it was when you took out your original auto loan, you may qualify for more affordable interest rates now. That would make this an ideal time to refinance.

2. You need more time to pay off your vehicle.

If you need to free up room in your budget every month, one way to do it is to refinance to an auto loan which has a lengthier term, giving you more time to pay off the loan.

3. You want to pay off your car loan early.

If you think that you could pay your car loan off early, refinancing to a shorter term can remove a prepayment penalty if one exists on your current loan. You also could simply refinance to a loan that does not include such a penalty.

4. You are simply looking for more competitive rates.

Sometimes, the reason to refinance is not because you are doing better financially, but because you are struggling and your current loan is not helping matters. While it can be more difficult to refinance auto loans with poor credit, there may be better rates and terms out there waiting for you if you do your research. Many online auto loan companies specialize in working with customers with poor credit. With their lower overhead, they are able to offer competitive interest rates.

5. The company you chose originally isn’t treating you fairly.

Finally, if you originally applied for your auto loan in a tough financial situation, you may not have looked closely into the lender that you chose. If you are being treated unfairly by your current lender, it is time to look into the best auto refinance companies for borrowers with bad credit.

Best Places to Refinance Auto Loans

We have now talked about why to refinance car loans. But we have not talked about how to refinance car loans. Where should you apply for refinancing auto loans for bad credit, and what do you need to make it happen?

  1. Begin by gathering the documents you will need to refinance. You need to know how much you still owe, what you are paying each month, the loan term, and your current interest rate. Grab a payment stub and hang onto that, and then locate your loan contract. Get proof of income (i.e. pay stubs), your VIN, and proof of your identity and insurance.
  2. Check your credit reports. Correct any inaccuracies you find, and then check your score. You may want to look up average auto refinance rates for your score before you proceed with your comparisons.
  3. Apply for auto refinance loans. You can do this both online and offline. Online, you will be able to apply quickly and easily to the largest selection of lenders. This should make it a breeze to locate the best offers, especially with bad credit. You do not need to submit all your documents when you are getting your quotes. The online forms only take a few minutes to fill out.
  4. Review the offers you receive and use our Car Loans Repayments Calculator to figure out which one will save you the most money.
  5. Double-check the fine print and make sure you are happy with all the terms. That way you can proceed with a loan that will hopefully serve your needs until your car is paid off this time.
  6. Sign on the loan agreement with the new lender.
  7. At this point, you are not quite done. You need to make sure you finalize everything with your previous lender and that you submit your first payment to your next lender on time. If you use automatic payments online, don’t forget to switch those over. Order a credit report in the near future as well so you can make sure both lenders have completed the refinance transition properly.

Refinance Your Auto Loan Now

Now you know how to refinance an auto loan even if you have bad credit. You also have learned some common reasons to refinance a vehicle loan and what types of benefits you can potentially look forward to. Ready to refinance your auto loan now and enjoy lower interest rates and more favorable terms? Just scroll to our table of recommendations to apply for a vehicle refinance loan now!