Taking out a new loan to pay off your existing car loan is what an auto refinance loan is all about. Depending on their financial circumstances, applicants may be eligible for a lower interest rate through refinancing, which might result in lower monthly payments and long-term savings.
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How Does Auto Refinance Loan Work?
Replacing your current auto loan with a new one, usually with a different lender, is known as refinancing. It’s a method to re-start your auto loan with a reduced interest rate and the loan duration you want. The length of your new loan might match the number of months left on your current loan, or you can cut or prolong it.
When Do You Need an Auto Refinance Loan?
You might want to think about refinancing your car loan when:
- Interest rates drop. It may be due to changing economic conditions, greater market competition, and regulatory changes.
- You can’t make your payments.
- Your interest rate was increased by a car dealer, ie. You realize your current lender charged you a higher interest rate than you could have qualified for
- You need to get rid of a cosigner but can’t or don’t want to use a regular release to do so.
Best Companies that Offer Refinancing Auto Loans
The following are the best companies that offer auto refinancing loans. See the eligibility requirements for each company.
- Ally Clearlane
Loan amount = $10,000 – $80,000
Estimated APR = 3.74-16.49%
Minimum credit score = 520
- Autopay
Loan amount = $7,500 – $100,000
Estimated APR = 2.15 – 17.99%
Minimum credit score = 560
- Consumers Credit Union
Loan amount = $5,000 – $75,000
Estimated APR = 2.69 – 21.24%
Minimum credit score = 620
- OpenRoad
Loan amount = $10,000 – $75,000
Estimated APR = 2.49 – 24.00%
Minimum credit score = 500
- RateGenius
Loan amount = $12,000 – $100,000
Estimated APR = 1.75 – 21.00%
Minimum credit score = 500
- RefiJet
Loan amount = $5,000 – $100,000
Estimated APR = 1.99 – 17.99%
Minimum credit score = 500
Which Lender is Best for You?
The better your credit score and financial situation, the more options you’ll have. Apply to a few other lenders to see what new interest rate you might be eligible for. Comparing various offers increases your chances of finding the best deal.
Remember that rate shopping can lead to many lenders contacting you, especially if you utilize a service that compares offers for you. Consider creating a new email account and obtaining a free Google Voice phone number to use separately.
Most lenders employ a soft credit check, which offers you an estimate of your rate but does not affect your credit score. Credit scoring models treat several inquiries in a short time period as a single event if you apply to more than one lender that requires a full application and hard credit check. That term is 45 days for most FICO models, for example.
