We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

Can I Refinance a Car Loan?

Mary McMahon
By
Updated May 17, 2024
Our promise to you
WiseGEEK is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGEEK, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

It is most definitely possible to refinance a car loan, and the process is often much easier and faster than the process of refinancing home loans. There are a number of reasons to choose to refinance a car loan, ranging from a desire to get a better interest rate as interest rates drop to a desire to reapply for a loan with a better credit record. Most banks and lenders offer refinancing opportunities for car loans.

Car loans have rates of interest which can vary considerably, depending on the lender, and the borrower's credit record. It pays to research ahead of time when purchasing a new or used car with a loan to find the best regional interest rates, rather than going with the lender recommended by the dealer, as this can save money right from the start. Even with research, though, a car loan may have a high interest rate because of the economic climate, or because the borrower has less than ideal credit. Refinancing a car loan can save a borrower a substantial amount in monthly payments, and over the life of the loan.

To refinance a car loan, a borrower should collect information on refinancing from regional financial institutions, such as banks and credit unions. Credit unions sometimes offer especially low interest rates to their members, and membership is as easy as opening an account at the credit union. While researching refinancing options, borrowers should find out what the interest rate is and if there will be any fees associated with the refinancing.

It also pays to ask about incentives. Some lenders will drop the interest rate slightly for people who enroll in automatic payment plans, and others may offer cash rewards to customers who bring their auto loans to them. A bank may also waive origination fees for a new car loan in some cases, especially if a borrower points out that another lender is offering a better interest rate or a cash bonus for refinancing.

Appraisal of the vehicle is usually not required to refinance a car loan; the borrower just needs to provide the make, model, and year to the bank to get an estimate of the car's value. The bank will handle the transfer of the loan from the original lender, along with the modification of the car's title to reflect the change of lender. Borrowers will usually need to provide proof of insurance and evidence that there are no other liens on the vehicle before a refinancing application will go through, and the bank will also run a credit check, which will cause a slight dip in the borrower's credit rating for a few months. The small and temporary decline in the credit rating is well worth the savings which will be obtained by refinancing a car at a better rate of interest.

WiseGEEK is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments

By Animandel — On Jul 19, 2014

This article talks about how some people have higher interest rates because they could only get a bad credit car loan. I had a friend who damaged her credit when she went through a divorce and she was forced to accept a high interest rate when she bought her new car.

Two years into the loan, her credit had improved and she was able to do a car refinance loan and save a lot of money. Your credit score is constantly changing so you should keep this in mind when you are considering refinancing a loan.

By Sporkasia — On Jul 19, 2014

@Laotionne - Refinancing your car loan should not hurt your credit score. As long as you are current with your payments when you refinance a car loan you are fine. However, if you don't refinance and you start to fall behind then that will without doubt lower your credit score.

Over the length of the car loan you probably won't save a great deal of money, but in your case it might be the perfect solution since refinancing will help you keep your credit in good standing.

By Laotionne — On Jul 18, 2014

I have had a couple unexpected bills come up recently and a friend suggested that I try to refinance my car loan so I could use the savings to help with my other bills. While I think my credit is good enough to do this, I'm not sure car refinance is a good idea. Refinancing a four year car loan seems like it would be a red flag on my credit report.

If I refinance a car loan will that hurt my credit score?

Mary McMahon

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Read more
WiseGEEK, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGEEK, in your inbox

Our latest articles, guides, and more, delivered daily.