Best Refinance Auto Loans for 2020

If you purchased a car and financed it for several years, a lot may have changed since you bought it. Your credit may have improved or interest rates went down, which means the lowest auto finance rates are available to you. Or changes in your income or budget mean that you can’t afford your monthly car payment and refinancing an auto loan to save money is vital.

The Simple Dollar SimpleScore is designed to help you find the best places to refinance auto loans. We evaluated features such as interest rates, fees, loan lengths and car restrictions from a variety of auto refinance lenders to help you search for the best places to refinance an auto loan.

Lending Partner
Min. Loan
Fixed APR
Eligible Degrees
  • LightStream
    Min. Loan
    $5,000
    Fixed APR
    2.49% – 11.89% w/AutoPay
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • PenFed
    Min. Loan
    $500
    Fixed APR
    Starting at 1.39%
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • Auto Credit Express
    Min. Loan
    N/A
    Fixed APR
    N/A
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • MyAutoloan
    Min. Loan
    $7,500
    Fixed APR
    3.49%–21.08%
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • CarsDirect
    Min. Loan
    N/A
    Fixed APR
    3.00% – 12.90%
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • Auto Credit Express
    Min. Loan
    N/A
    Fixed APR
    N/A
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • CarsDirect
    Min. Loan
    N/A
    Fixed APR
    3.00% – 12.90%
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • LightStream
    Min. Loan
    $5,000
    Fixed APR
    2.49% – 11.89% w/AutoPay
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • MyAutoloan
    Min. Loan
    $7,500
    Fixed APR
    3.49%–21.08%
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • Penfed
    Min. Loan
    $500
    Fixed APR
    Starting at 1.99%
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • LightStream
    Min. Loan
    $5,000
    Fixed APR
    2.49% – 11.89% w/AutoPay
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • LightStream
    Min. Loan
    N/A
    Fixed APR
    2.49% – 9.49% APR w/AutoPay
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • MyAutoloan
    Min. Loan
    $7,500
    Fixed APR
    3.49%–21.08%
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
  • PenFed
    Min. Loan
    N/A
    Fixed APR
    N/A
    Eligible Degrees
    N/A
    NEXT
    on lender’s secure website
In this article

    The best auto refinance loans of 2020

    Auto refinancing loans at a glance

    LenderAPRTermsLoan AmountKey Benefits
    LightStream2.49% – 9.49% APR w/AutoPay24–84 months$5,000–$100,000Low refinance amount
    LendingClub10.68%–35.89%24–84 months$5,000–$55,000Compare two refinance offers
    Capital One4.07%–24.99%24–84 months$7,500–$50,000No credit check for rate
    Bank of AmericaAs low as 3.49%12–75 months$7,500–$100,000Fast decision/rate lock
    US BankAs low as 2.59%24–84 months$10,000–$100,000Online application available
    AutoPayAs low as 1.99%24–84 months$2,500–$100,000Compare multiple refinance offers

    Best overall – LightStream

    Don’t play around with an interest rate check and go in committed — LightStream does a hard pull, which will drop your credit score just a bit.

    APR Range
    2.49% – 9.49% APR w/AutoPay
    Term
    24–84 months
    Customer Satisfaction
    3/5
    SimpleScore
    4.6 / 5.0
    close
    SimpleScore LightStream 4.6
    Rates (Median) 5
    Vehicle Restrictions 5
    Terms 5
    Customer Satisfaction 3
    Fees 5

    Auto refinancing for good credit applicants with no fees, no appraisals, no fuss.Got good credit? Then use it. LightStream will refinance your auto loan at a great rate and no fees if your FICO score is 660 or higher. Borrowers with good credit get plenty of perks from the loan division of SunTrust Bank/Truist. Having good credit means you won’t need to have your car appraised and don’t have to worry about the age or miles of the car. Once you’re approved, you’re on your way to saving money on your monthly payments without all the fuss other borrowers have to deal with.

    LightStream Disclosure

    Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay may be higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.

    Payment example: Monthly payments for a $10,000 loan at 4.99% APR with a term of 3 years would result in 36 monthly payments of $299.66

    © 2020 Truist Financial Corporation. SunTrust, Truist, LightStream, the LightStream logo, and the SunTrust logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.

    Best P2P lender – LendingClub

    LendingClub is the Match.com of auto refinance loans — let the platform introduce you to two new lending candidates to choose from.

    APR Range
    7.00%–24.99%
    Term
    24–84 months
    Customer Satisfaction
    N/A
    SimpleScore
    3.3 / 5.0
    close
    SimpleScore LendingClub 3.3
    Rates (Median) 3
    Vehicle Restrictions 1
    Terms 5
    Customer Satisfaction N/A
    Fees 4

    Skip the bank loan and work with an investor willing to lend you the money you need for an auto refinance loan. Peer-to-peer lending is an alternative way to borrow. Apply for an auto refinance loan and LendingClub will present it to its marketplace of individuals willing to offer loans in exchange for earning some interest on their money. You’ll get back two refinance offers to choose from. The higher your credit score, the lower the risk to the lender — and the lower your interest rate. If you have a lower FICO, you’ll probably qualify for a loan, but don’t expect the best interest rate.

    Best online portal – Capital One

    Try before you buy with no effect to your credit score — get prequalified for an accurate interest rate and monthly payment to decide without obligation.

    APR Range
    4.07%–24.99%
    Term
    36–72 months
    Customer Satisfaction
    4/5
    SimpleScore
    4.6 / 5.0
    close
    SimpleScore Capital One 4.6
    Rates (Median) 4
    Vehicle Restrictions 5
    Terms 5
    Customer Satisfaction 4
    Fees 5

    Prequalify for an auto refinance to know how much the loan will cost you with no effect to your credit. Capital One makes the auto refinance process simple. Enter your information to prequalify for auto refinancing to see what type of loan you can get. You’ll get an accurate picture of interest rate and monthly payments depending on the loan length. The good news is, doing so won’t affect your credit score — the lender won’t do a hard check until you’re officially ready to move forward. You won’t have to worry about any fees when you refinance. Capital One doesn’t charge any and already factored any state title transfer fees into your loan cost when you prequalified.

    Best for existing customers – Bank of America

    Ordering a latte at Starbucks takes longer than getting approved for an auto refinance with Bank of America.

    APR Range
    3.49%–24.99%
    Term
    12–75 months
    Customer Satisfaction
    3/5
    SimpleScore
    3.4 / 5.0
    close
    SimpleScore Bank of America 3.4
    Rates (Median) 4
    Vehicle Restrictions 3
    Terms 3
    Customer Satisfaction 3
    Fees 4

    Take advantage of an existing banking relationship to get a better rate on your auto refinance. Bank of America makes it possible to refinance your car fast — BofA claims you’ll get an answer in just 60 seconds. The bank has plenty of online resources and a car loan calculator to figure out how much your refi will cost you each month. But all the online features don’t hide the fact that you’re working with a traditional lender — qualifying for a refinance may be a challenge if you have a lower credit score. If you already have an account with the bank, your odds may be better and the Preferred Rewards program could earn you a discount on the interest rate.

    Best for short-term refinance – US Bank

    Commitment-phobes will be rewarded with savings on their auto refinance when they opt for a shorter-term loan.

    APR Range
    2.59%–24.99%
    Term
    Up to 36 months
    Customer Satisfaction
    2/5
    SimpleScore
    3.4 / 5.0
    close
    SimpleScore US Bank 3.4
    Rates (Median) 4
    Vehicle Restrictions 5
    Terms 3
    Customer Satisfaction 2
    Fees 3

    Save money on your auto loan refinance when you go with a shorter-term loan from US Bank. Customers that already bank with US Bank and would like the convenience factor of having their loans with their bank would be good candidates for a US Bank auto refinance. Regardless of the reasons for choosing US Bank, the best rates come with shorter refinances. If you can afford a shorter term, you may be able to offset the monthly cost by the interest rate savings.

    Best lender martketplace – Autopay

    Best lender marketplace – AutoPay

    Best for those with FOMO (fear of missing out) — you’ll get several auto refinance offers to choose from.

    APR Range
    1.99%–17.99%
    Term
    Up to 84 months
    Customer Satisfaction
    N/A
    SimpleScore
    4.5 / 5.0
    close
    SimpleScore AutoPay 4.5
    Rates (Median) 5
    Vehicle Restrictions 3
    Terms 5
    Customer Satisfaction N/A
    Fees 5

    Shop your refinance around, even with poor credit, through AutoPay’s lending marketplace. AutoPay makes comparing auto refinance offers a one-stop deal. You’ll get a variety of refi loan offers from banks, credit unions, and other lenders. AutoPay’s impressive 1.99% is saved for people with excellent credit, but the lending marketplace labels itself as credit-score friendly. Even if you have a fair to low credit score, you’ll likely receive offers, albeit at a higher interest rate.

    What is an auto loan refinance?

    Refinancing your auto loan involves replacing your current loan with a new one. Your existing auto loan is paid off by your new lender and you repay your new lender according to the rates and terms of your new loan.

    Although refinancing auto loans often mean moving from one lender to another, it is possible to negotiate a more suitable deal with your current lender. This is particularly the case if you’ve demonstrated a history of on-time payments.

    While it’s often described as a great way to put money back into your pocket, refinancing isn’t the right move for everybody. It’s important to understand what refinancing your auto loan means and how to find the best refinance auto loans on the market today.

    [ Read: Best Auto Loan Rates for 2020 ]

    How refinancing an auto loan works

    If you’ve had your auto loan for a while, there’s a chance you could secure a lower rate through refinancing. Perhaps your income has increased or your credit score improved and you’re sure you can get a better interest rate.

    Refinancing then is all about ensuring you’ve got the best deal by reviewing your current loan and comparing it to current auto loan rates. It’s also about analyzing the benefits — and costs — of replacing your loan.

    So why refinance? First, a lower rate means smaller monthly payments. If you’re paying monthly fees on your auto loan, then switching to something with lower or no fees could save significant amounts over the life of the loan.

    Some borrowers refinance auto loans to extend their loan term. While this will generally lead to paying more interest overall, it frees up monthly cash flow and is an important fallback for someone experiencing financial difficulties.

    [ Read: The Simple Dollar Guide to Auto Loans ]

    New terms

    Refinancing auto loans means agreeing to new contractual terms. Apart from the interest rate on the loan, other important loan features to consider include the repayment period or loan term and if there’s a balloon payment at the end of the loan period.

    You may choose to extend your auto loan term to lower monthly payments, but you will owe money for longer, and this usually leads to paying more interest overall.

    Some auto loans have lower monthly payments then a much higher final payment, called a balloon payment, at the end of the loan period.

    New rates

    When refinancing, you could be offered a lower or higher interest rate depending on the strength of your credit and whether general interest rates have gone up or down. Refinancing your auto loan is unlikely to make financial sense with a higher rate because your monthly payments will be greater. Conversely, a cheaper rate will lower your monthly payments.

    In fixed-rate auto loans, the interest rate will remain the same throughout the loan period, and this results in predictable repayments. In variable auto loans, the lender can adjust the interest rate, so your repayments can get bigger or smaller over time, although variable auto loan rates are extremely uncommon.

    Vehicle restrictions

    Even when you have found the best auto loans on the market, you’ll still need to check that your vehicle is eligible for financing or refinancing with those lenders. Common restrictions relate to the age, mileage, value or purpose of the vehicle.

    These restrictions exist because lenders want to ensure your vehicle is valuable enough for you to keep paying off your loan. In secured loan arrangements, lenders are also looking to reduce the risk of losing money by financing only easy-to-sell vehicles that hold up in value.

    Each lender will have its own vehicle eligibility criteria. However, you may find it more difficult to find auo refinancing if your car is:

    • More than 10 years old
    • Has 125,000 miles or more
    • Used commercially or for a business purpose
    • Valued at less than $6,000

    [ Read: Why No One Should Get an 84-Month Auto Loan (Ever) ]

    Refinancing vs. selling your car

    If you’re finding your monthly repayments unaffordable, an alternative to auto loan refinancing is to sell your vehicle and pay off the loan, then trade down to something cheaper.

    Starting over with a new auto loan allows you to find a better deal and potentially negotiate a cheaper rate and/or a longer loan term. Given the general decline in interest rates due to COVID-19 and smaller loan sizes, this strategy could be effective in lowering monthly repayments.

    However, unless you’ve fallen out of love with your car and desperately want a new one, refinancing is by far the easier option to reduce your monthly repayments. Not only is selling a vehicle under finance tricky, but there’s also a risk that your vehicle is worth less than you owe, meaning you’ll have to find extra cash to pay off the old loan.

    [ Related: What Is an Upside Down Car Loan? ]

    In short, refinancing can yield similar benefits but avoids the hassle of selling a vehicle under finance. If your car is in good condition, then the refinancing strategy will also give you a chance to sell the car yourself once the loan has been paid off.

    When should I refinance my auto loan?

    There are many circumstances when refinancing auto loans can put you ahead financially. One of the best times to consider this strategy is if your credit has improved since you took out the previous loan. You’ll likely qualify for a cheaper loan with a better credit score, at least six to 12 months of on-time payments, a higher income and a lower debt-to-income ratio.

    For some people, replacing their auto loan is about achieving improved cash flow. For example, if you’re in financial difficulty, extending your loan can lower monthly payments and free up more cash. However, bear in mind a longer loan term usually means paying higher overall interest.

    It makes sense to refinance as long as the savings exceed the costs from taking out a new loan. Remember, refinancing can involve upfront application fees and early repayment penalties on your current loan.

    [ Read: Car Finance: The Math on Why You Should Pay Cash for Your Next Car ]

    What you need to know about refinance car loan interest rates

    Like auto loan rates for a new vehicle purchase, refinance rates for car loans have also been falling in line with federal rate cuts. Because of the coronavirus pandemic, federal interest rates dropped to near 0% in March 2020. This drop in rates makes auto loan refinancing an attractive money-saving strategy for those who have had their auto loan for 12 months or more.

    Generally, average auto loan refinance rates are cheaper than new finance rates for either a new or used vehicle. Auto loan refinance rates work in the same way as interest rates for a new purchase, which means the stronger your credit, the cheaper your rate and your loan will be.

    Check Your Auto Loan Rates

    View our top-rated lenders and find the best rates today. It’s quick and easy.

    Refinancing an auto loan with bad credit 

    Refinancing an auto loan is possible even if you have bad credit, though it may take more planning and effort.

    Whether your credit is strong or less-than-perfect, it’s essential to check your credit history and credit score at the start of the process to make sure it’s accurate.

    You’ll want to know whether your credit has improved since you took out your old auto loan. If it has, then you’re in a better position to refinance at a lower rate. But if it hasn’t, then you could consider refinancing with a cosigner who has better credit than you to strengthen your application.

    [ More: How to Get Out of Your Car Loan ]

    In the current environment where auto loan rates are on the decrease, making a stronger application through improved credit or adding a cosigner will give you a good chance to secure a lower rate.

    While there are finance lenders that specialize in lending to borrowers with bad credit, your current lender might be open to renegotiating or refinancing your loan, too. But you lender’s willingness largely depends on whether you have demonstrated a history of responsible financial behavior.

    For borrowers who can wait, improving your credit score before making a refinancing application could result in a better deal. Effective credit-building strategies include making on-time payments and utilizing less of your available credit. You can also try to lower your monthly payments so it’s easier to meet your obligations. But as mentioned, extending your loan term could lead to paying more interest overall.

    [ Read: What Are 0% APR Auto Loans? ]

    How to refinance your auto loan

    Here’s a step-by-step guide to help you with refinancing your auto loan.

    1. Check that you are up-to-date with your payments. Lenders are more likely to approve your application if you have a history of on-time payments on your current loan.
    2. Check your credit report to verify its accuracy.
    3. To decide whether you’ll benefit from refinancing, review over your current loan terms including any exit or prepayment fees. You’ll also need to know your current debt amount and when the loan period will end. If your loan has less than 12 months left, then the cost of refinancing may outweigh potential savings.
    4. Determine your vehicle’s worth using online estimation tools such as those from Edmunds. If your vehicle is worth less than you owe, then you may find it more difficult to qualify for refinancing loans.
    5. Shop and compare. The best place to start is online, as you can compare multiple deals in little time. Apart from the interest rate, look out for other loan terms such as any early repayment fees, application fees and origination fees. As part of this step, you can apply for pre-qualification to get an interest rate estimate from different lenders.
    6. Gather paperwork. Once you have identified a deal that suits you, gather your personal, income, loan and vehicle documentation. 
    7. Apply for the loan and once approved, give the 10-day payoff amount to your new lender. 
    8. Continue making payments to the previous lender until the transaction is finalized. You’ll likely get an email or a letter in the mail detailing the final payment on your old loan.
    9. Start making payments to your new lender.

    How to choose the best auto loan refinance for you

    The best auto loan refinance product is one that matches your circumstances and offers an attractive interest rate. Here are some steps to find your ideal loan.

    1. Shop around. Comparison websites are often a good starting point because they allow you to evaluate multiple lenders’ rates quickly. You’ll also find basic product information like the size of loans, length of borrowing and whether loans are fixed or variable. Shortlist at least three providers with products matching your needs.
    2. Check the fine print. Take a closer look at the lenders on your shortlist and understand their products. Determine if you’ll meet their eligibility criteria, paying attention to things like vehicle restrictions, minimum loan amount and credit requirements. Are there fees you should be aware of, like early repayment or application fees?
    3. Apply for pre-qualification. This gives you an estimate of the rate you’ll be offered by the lender. If you apply to multiple lenders within a short period, it’ll likely be treated as a single inquiry on your credit file.
    4. Do the math. Getting a lower refinance rate doesn’t always mean you’ll be better off financially, as you’ll need to account for entry and exit fees. The same goes for lower monthly repayments because if you’re paying less over a longer timeframe, the cost of your loan overall could actually be higher. Work out the total cost of the refinance loan to make sure savings outweigh costs.
    5. Pick the best deal. Then make a full application.

    Auto loan refinancing FAQs

    If interest rates dropped enough where refinancing your auto loan could save you a significant amount of money on your auto loan. It all depends on what you’re comfortable with. If your current monthly payment is $475 per month and refinancing for the same amount of time left comes in at $410 per month, refinancing to save $65 per month is worth it.

    Lenders set restrictions on the type of vehicle they’re willing to finance. Some of the conditions include newer vehicles, ones with higher value, low mileage autos, or cars for personal use only. Lenders are looking out for their investment by ensuring the car you’re refinancing is valuable enough for you to want to continue paying your loan off.

    Refinancing to shorten your loan (if you can realistically afford it) may be in your best interest to get out of debt faster. You’ll not only save on interest from making fewer payments, but you’ll free up a significant amount of money from your monthly spending sooner. Refinancing your loan to lower your payments is advisable if the interest rate is low enough to make your monthly payments lower without changing the time left on your loan. If you’re refinancing to pay less by extending your payments for longer, you should evaluate how else you could make up for the shortfall instead of lengthening the time it takes to pay for your car.

    We welcome your feedback on this article and would love to hear about your experience with the auto refinance loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

    Methodology

    SimpleScore

    We’ve created the SimpleScore™ to help you objectively compare products and services here at The Simple Dollar.

    Our editorial team:

    • Identifies five factors to compare across each brand
    • Determines the rating criteria for each factor
    • Calculate an average of those five factor scores to get one SimpleScore™

    We break down each of these five factors and their rating criteria for our review of the best auto loan companies of 2020.

    Why do some brands have different SimpleScores™ on different pages?

    Some brands like Bank of America, Wells Fargo, and Chase have different SimpleScores™ because they offer more than one financial solution — like auto loans, home loans, personal loans and banking.

    For instance, in our Bank of America Mortgage Review, we give the company a 3.8 out 5 based on our five rating factors for mortgages. In our Bank of America Auto Loans Review, we give the company a 4.4 out of 5 based on our rating factors for auto loans. By tailoring our SimpleScore™ to each financial solution, we’re able to give you a more accurate view of their services and how they compare to competitors’ services.

    Minimum new car rate

    Companies that look out for new car buyers with lower rates receive higher scores from us.

    Minimum used car rate

    We also give higher ratings to companies that look out for used car buyers by offering lower rates.

    Maximum loan size

    Having enough money to cover your auto loan is important –– that’s why companies with higher maximum loan amount receive better scores from us.

    Customer satisfaction

    We use the J.D. Power 2019 Consumer Lending Satisfaction Study℠ to find out how customers rate their experience with each company. (If a company is not included in J.D. Power’s study, we skip this rating factor and average the remaining factor scores.)

    Fees

    Fees can add up very fast –– that’s why we give a higher score to companies who have fewer fees.

    Kristie Kwok

    Contributing Writer

    Kristie Kwok is a finance content writer with in-depth knowledge of the banking industry from her previous work experience in banks such as UBS, Lloyds Banking Group and Royal Bank of Scotland. She is a qualified accountant with a Bachelor of Commerce degree, specializing in Accounting and Finance.

    Reviewed by

    • Courtney Mihocik
      Courtney Mihocik
      Editor

      Courtney Mihocik is an editor at The Simple Dollar who specializes in insurance, personal finance, and loans. Previously, she wrote and edited for Interest.com, PersonalLoans.org, Ballantyne Magazine, Thread Magazine, The Post, ACRN, The New Political, Columbus Alive and the Institute for International Journalism.