Best refinance auto loan companies and rates of 2022

Content of the material

  1. When to Consider Refinancing
  2. Video
  3. What to look for in a good auto refinance lender
  4. Calculating the Current Cost of Your Auto Loan
  5. Gerry, Florida
  6. How We Found the Best Auto Refinance Loans
  7. Competitive Rates
  8. Flexible Repayment Terms
  9. Minimal Restrictions
  10. Broad Availability
  11. How Long Does It Take to Refinance a Car Loan?
  12. Pre-qualify in minutes
  13. How Can You Refinance an Auto Loan?
  14. How Your Credit Score Affects Rates
  15. Best for Low Auto Refinance Rates: PenFed Credit Union
  16. Pros
  17. Cons
  19. Best for people with a low car loan balance: PenFed Credit Union
  20. Here are some more details about PenFed Credit Union.
  21. #1 Auto Approve: Top Choice for Refinancing
  22. Auto Refinance Companies FAQ
  23. How to refinance a car
  24. When can I refinance my car?
  25. What is auto refinance?
  26. When refinancing doesnt make sense
  27. How does refinancing a car work?
  28. What are the requirements for refinancing a car?
  29. Can I refinance my car with bad credit?
  30. How Much Does it Cost to Refinance an Auto Loan?
  31. How Does an Auto Loan Refinance Work?
  32. What to look for when refinancing an auto loan
  33. Interest rate
  34. What If Your Application For Refinancing Is Denied?
  35. Can You Refinance a Car Loan With Bad Credit?
  36. When should I refinance my car loan?
  37. Refinancing your auto loan is really simple (really)
  38. Apply online
  39. Your rate is locked
  40. FAQ: Editors’ answers
  41. Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted.

When to Consider Refinancing

There are several situations in which you may consider refinancing your current auto loan. Here’s a rundown of the most common reasons to see if an auto loan refinancing could be a smart choice for you.

  • When interest rates are lower than when you took your car loan.
  • You’ve improved your credit and could qualify you for a better rate.
  • You want to refinance a car lease into a purchase loan.
  • You want to lower your monthly payments by extending the loan term. It could result in more money paid in interest but can help keep you current on the car loan.


What to look for in a good auto refinance lender

When you refinance an auto loan, you’re taking out a new loan and using it to pay off your existing loan. In other words, you want to make sure that the new loan is a better deal than the one you have now. When comparing offers from various auto refinance companies, as well as those from your own bank, credit union or online lender, focus on how much you’ll end up paying throughout the life of the loan. It’s not enough to look at just the monthly payment, as that may not be not the best indicator of your best deal. Sure, an auto refinance company may offer you a low monthly payment — but you may not get your best deal if its interest rate is higher and it charges other types of fees. Here’s what to look for in an auto refinance loan:

Calculating the Current Cost of Your Auto Loan

If you’re considering refinancing your auto loan, it’s important that you understand how much your current car loan is costing you. That way, you’ll be able to determine how much you could save by refinancing. You can easily use an auto loan calculator to discover exactly how much interest you will pay during the remainder of your loan term.

Let’s say that the remaining balance on your auto loan is $20,000 and you have five years (or 60 months) left on the loan. If you’re currently paying an 8% interest rate on your auto loan, you will pay about $406 per month and by the time your loan is repaid you will pay a total of around $4,332 in interest.

If you were to refinance your auto loan at the same term length of five years but at a 4% interest rate, then you would pay approximately $368 per month and you would pay nearly $2,100 in total interest. With this example, you would save a little more than $37 per month and about $2,232 over the life of your loan.

The greater the difference in rates and the more money that you owe, the more you will save by refinancing your auto loan. As you can see in this scenario, refinancing wouldn’t just make a big difference in your monthly payments, but it would save you a significant amount of money over time.

Gerry, Florida

“This was the quickest, most hassle free car loan I have ever done. Plus I saved on my interest rate. Thank you, Capital One!”

How We Found the Best Auto Refinance Loans

There are hundreds of companies that offer auto refinance loans, but the best refinancing firms have several factors in common. Here are the attributes we looked for when selecting lenders for our best auto refinance lender rankings.

Competitive Rates

The main driver of auto loan refinancing is securing a lower auto interest rate. With that in mind, we looked for lenders and loan comparison sites that offer the best and most competitive interest rates on the market today.

Flexible Repayment Terms

We also looked for lenders that offer a broad range of repayment options, and preferably options that last from 24 to 84 months. The more repayment terms offered, the more flexibility borrowers have to choose a loan term and monthly payment that fits with their budget and goals.

Minimal Restrictions

Some of the lenders in our ranking set minimum standards for their auto refinance loans, such as only refinancing vehicles with a certain age or mileage. While we chose lenders with restrictions for our ranking, we only selected companies that refinance cars up to 10 years old with up to 120,000 miles.

Broad Availability

We also looked for auto lenders that offer refinance loans on a national basis, or at least with broad reach in at least 30 states. 

How Long Does It Take to Refinance a Car Loan?

The refinance process timeline varies by lender. Some lenders provide fast approval and promise funding in as little as 24 hours while others may take days or even more than a week to review your application and provide you with funds.

Pre-qualify in minutes

Tell us about yourself and your vehicle to see what you could save. There’s no commitment and no impact to your credit score.

How Can You Refinance an Auto Loan?

Each lender has its own process and requirements for refinancing auto loans. However, the steps to refinance are generally similar to taking out an initial car loan. Here’s what the refinance process looks like:

  1. Check your credit report. Fixing any errors on your credit report may help raise your credit score. Lenders largely determine the rate you receive based on your credit, so any improvements to your credit will lead to lower rates and bigger savings on your loan in the long run.
  2. Gather documents and information about your existing loan and your current vehicle.
  3. Shop refinance loans at multiple lenders and get preapproved. Include online lenders, big banks, credit unions, and community banks in your search. Any lender with competitive rates and fees is worth consideration. Remember, credit inquiries within a 14- to 45-day period count as a single inquiry on your credit report.
  4. Decide on a lender. Sign your new contract and send any supporting documents needed, including proof of income.

How Your Credit Score Affects Rates

Just like when you applied for a purchase loan, your credit score affects the rates you find for refinance auto loans. But if it’s been a year or two since you applied, your credit score may be in a better place. You can take advantage of that and the fact that you’ve already paid toward the value of your car to get a better rate on an auto refinancing loan. 

Auto loan annual percentage rates (APR) range from about one percent to fourteen percent or more. Here’s the average APR per credit score segment according to Experian’s 2021 State of the Automotive Finance Market report. 

Credit Score Average New Car APR Average Used Car APR
781 to 850 2.34% 3.66 %
661 to 780 3.48% 5.49%
601 to 660 6.61% 10.49%
501 to 600 11.03% 17.11%
300 to 500 14.59% 20.58%

Best for Low Auto Refinance Rates: PenFed Credit Union

See Rates

Our Partner


  • Ability to refinance 100% of your car loan balance
  • Provides rate discounts for using its car buying service
  • Quick online application takes under five minutes
  • No prepayment penalties


  • Excellent credit required for best rates
  • Membership required
  • PenFed auto loans aren’t eligible
  • No cash-out refinance or lease buyout


Loan Amounts
Up to $100,000
APR Rates
Starting at 1.79%
Loan Terms
36 to 84 months

Pentagon Federal Credit Union offers some of the lowest rates for auto loan refinance on the market, starting at 1.79% for a new car refinance and 2.39% for a used car refinance.

If you’re the vehicle’s original owner and the car is a 2020 model or newer, you could even qualify for a new car refinance loan.

Optional add-ons include Guaranteed Asset Protection (GAP), an extended warranty and debt protection.

To apply, with PenFed, borrowers must meet one of the following requirements:

  • Military service (active-duty or veteran)
  • Work at or are a part of its list of employers and organizations
  • Live in one of the locations it covers
  • Have family that is a PenFed Credit Union member
  • Make a $15 donation to Voices for America’s Troops or a $17 donation to the National Military Family Association, so you qualify for membership

As one of the membership conditions, borrowers must open a savings/share account with a $5 minimum balance and no monthly maintenance fee.

Why we chose it: We chose PenFed as best for low auto refinance rates because not only are they some of the lowest available, the credit union also offers good perks, such as rate discounts and zero prepayment penalties

Best for people with a low car loan balance: PenFed Credit Union

Why PenFed Credit Union stands out: Many auto lenders have minimum loan amounts of $5,000 or more, making it difficult to refinance an existing loan with a low balance. But the minimum loan amount at PenFed Credit Union is $500.

Here are some more details about PenFed Credit Union

  • Membership required — You must be a member to qualify for an auto loan from PenFed Credit Union. Joining is easy, and you don’t necessarily have to be a member of the military.
  • Large loan range — PenFed Credit Union offers auto loans ranging from $500 to $100,000, depending on your loan term.
  • Doesn’t refinance its own loans — If you got your current car loan from PenFed Credit Union, it won’t refinance your loan. The lender only refinances auto loans from other lenders.
Read our full review of PenFed Credit Union auto loans to learn more.

#1 Auto Approve: Top Choice for Refinancing

Starting APR: 2.25% Loan amounts: $5,000 to $85,000 Loan terms: 12 to 84 months Availability: 50 states Minimum credit score: 580

Unlike the other lenders on this list, Auto Approve doesn’t finance new car purchases. Instead, the company specializes in refinancing auto loans. However, when it comes to the type of vehicle you can refinance, Auto Approve offers much more flexibility. The company works with a network of lenders to offer refinancing for motorcycles, ATVs, boats and RVs in addition to the standard cars, trucks and SUVs.

Auto Approve’s auto loan refinancing rates begin at 2.25% APR, which is toward the lower end of the rates we saw in our research, but note that only the most qualified borrowers will likely get a rate this low. The company doesn’t charge an application fee or a prepayment penalty.

Borrowers can select terms of 12 to 84 months to refinance their vehicles. Auto Approve is also accessible to those who don’t have the best credit history since it has a minimum credit score of only 580. However, borrowers with lower credit scores should expect to pay higher rates than the minimum APR featured here.

Auto Refinance Companies FAQ

How to refinance a car

Before starting the application process, shop around and compare offers from different lenders. When you settle on the best one, submit a formal application and wait for the lender’s formal offer. If accepted, you can finalize the document, settle the previous loan, and start your loan payments with the new lender.

When can I refinance my car?

You shouldn’t consider refinancing your car loan if you’re financially stressed or if your loan value goes underwater, meaning that the loan’s value is higher than what your car is worth. This type of loan will impact your loan to value ratio, and significantly reduce the chances of receiving favorable loan terms for a refinance.

What is auto refinance?

Before starting the application process, shop around and compare offers from different lenders. When you settle on the best one, submit a formal application and wait for the lender’s formal offer. If accepted, you can finalize the document, settle the previous loan, and start your loan payments with the new lender.

When refinancing doesnt make sense

Refinancing your car loan isn’t always the right choice. If you are close to paying off your loan, refinancing may not save you money. Just stick with it unless you desperately need to extend your loan term to reduce your monthly payment.

Being upside-down on the original loan will also make it difficult to refinance. Lenders typically won’t approve you if you owe more on the car than it is worth. This is also known as being “underwater” on the loan — and it is a tough spot to get out of.

If your car is older or has quite a few miles on it, lenders may not want to refinance. This usually looks like a vehicle that is 10 model years old or has more than 100,000 miles, although the specifics vary by lender.

How does refinancing a car work?

If you’re dealing with high interest rates on your car loan, refinancing could help you reduce your rates and potentially save on monthly car payments. While refinancing isn’t the right choice for everyone, it can be a good move if you fit one of the following categories:

  • Your credit score has gone up. If your credit score was less than ideal when you applied for a car loan, you might be dealing with high interest rates. Once you’ve put in the work to raise your credit score by making on-time payments on your current loan, refinancing could give you a shot at a car loan with a better interest rate.
  • Your current interest rate is higher than it should be. Maybe you had to purchase a car when interest rates weren’t at their lowest. If you’ve been monitoring interest rates and they’re lower than your current rate, it might be the right time to refinance your car loan.
  • Interest rates on car loans have dropped. With the ongoing economic effects of the COVID-19 pandemic, car lenders are offering lower interest rates and other deals to incentivize car owners to refinance their existing loans. If you’ve maintained financial stability throughout the coronavirus pandemic, take time to compare rates to see if it’s worth refinancing right now.
  • You’re struggling to make your monthly car payments. While refinancing your car loan is a great way to get a lower interest rate, it can also be a way to extend your loan term and lower your monthly payments. If your monthly payments have become too much of a burden, look into extending your loan term by refinancing.

What are the requirements for refinancing a car?

Each auto loan refinance company has different eligibility requirements, but the two most common criteria are:

  • A solid credit history
  • An existing car loan

Some refinancing companies have higher credit score requirements than others but may be able to refinance your car loan at a lower interest rate as a result. If you have excellent credit, make sure you take full advantage of it by comparing the refinancing rates of multiple lenders and negotiating with your lender of choice.

Another requirement to watch out for when picking an auto refinance lender is the minimum amount you owe — some refinancing companies require that you owe a certain amount of money on your current loan in order to be eligible for refinancing. This amount might be anywhere from $5,000 to $10,000, depending on the lender you choose.

Can I refinance my car with bad credit?

Refinancing your car with bad credit is possible, but it might not be the right choice for you. If your goal for refinancing is to get a car loan with a lower interest rate, you’ll have access to better rates by improving your credit score first. If your goal for refinancing is to extend your loan term and possibly lower your monthly payments, you could refinance by working with a lender that specializes in bad credit car loans.

How Much Does it Cost to Refinance an Auto Loan?

Just like each auto lender has different criteria for refinancing an auto loan, they also have different refinance fees. Some auto lenders charge processing and origination fees to do the refinance paperwork, and you may have to pay a prepayment penalty from your original lender. However, other lenders don’t charge any fees, so you will want to find this out ahead of time.

How Does an Auto Loan Refinance Work?

An auto loan refinance is when you replace your current auto loan with a new one, intending to receive a lower interest rate. Your new loan will pay off the old loan, and you will sign new paperwork, have new terms and conditions, and a new interest rate.

You typically choose to refinance your auto loan if you’re unhappy with the rate or terms, or your credit score has gone up significantly since your original loan. Usually, refinancing is to save money, but keep an eye out for refinancing fees.

What to look for when refinancing an auto loan

When comparing options to refinance your auto loan, consider more than just APR. There are a few key aspects of a loan that can have a significant impact on its overall cost.

Interest rate

Your interest rate is how much the lender charges you for your loan, expressed as a percentage. While it’s not the only factor affecting the lifetime cost of your car loan, your interest rate is probably the most important.

Your APR combines your interest rate with fees and other loan costs. An increase in APR can make a huge difference over the full length of your loan. Here’s an interest payment example:

What If Your Application For Refinancing Is Denied?

Take a breather because it’s not the end of the world. In fact, it’s the perfect opportunity to return to the drawing board and figure out what’s dragging your credit score down.

The lender should be able to provide you with insight on why your application was denied, and this will serve as a starting point to make improvements and try again. But if you don’t know where to start, check out our ultimate guide on how to repair your credit.

Can You Refinance a Car Loan With Bad Credit?

Yes, several lenders offer auto loan refinance options for borrowers with bad credit. Some lenders don't even have a credit requirement to get a loan.

When applying for these loans, watch out for high interest rates. Many loans for borrowers with poor credit come with high annual percentage rates that can add significantly to the cost of the loan.

When should I refinance my car loan?

There is no best time to refinance your car loan — if it saves you money, it is a good time. There are a few situations where refinancing makes the most sense.

  • Refinance when auto rates have gone down. Most car loan interest rates fluctuate based on the prime rate and other factors. If you purchased your car a while ago, it is possible that car loan rates have decreased since then.
  • You have improved your credit score. Even if market rates haven’t changed drastically, improving your credit score may be enough to get a lower rate. If you have improved your credit score since signing up for your initial loan, you may qualify for better loan terms.
  • You got your initial loan from the dealer. Dealers tend to charge higher rates than banks and credit unions to make a bigger profit. If you took out your initial loan through dealer-arranged financing, refinancing with a different lender could get you a lower rate.
  • You need lower monthly payments. In some cases, refinancing a car loan may be your ticket to a more affordable payment, with or without a lower interest rate. If your budget is tight and you need to reduce your car payment, you could refinance your loan to a longer term. But while your monthly payment will be lower, expect to pay more in interest.

Refinancing your auto loan is really simple (really)

Apply online It only takes minutes for most customers, no fee to applyYour rate is locked Apply to refinance and lock your rate for 30 days upon approvalApply now for auto loan

FAQ: Editors’ answers

Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted
When should you refinance your car loan?

Whether refinancing your car is right for you depends on your financial circumstances and goals. You may want to give it some thought if your credit, finances or interest rates have recently improved.Lenders look at a number of factors when determining your loan rate and terms. These may include your credit history, credit scores and debt-to-income ratio — your monthly debt payments compared to your monthly income. If your credit has improved or you’ve reduced your debt since you got your original car loan, you may be able to get a better interest rate with a refinance loan. Even if your credit was good to begin with, you may not have gotten the best rate possible on your original loan if you didn’t shop around or you got your car from a dealership. Dealers may mark up interest rates in exchange for arranging your financing.Auto refinancing may also make sense if interest rates have dropped since you took out your current loan. Interest rates can change regularly, and even a drop of 2 or 3 percentage points could result in substantial savings over the life of your loan.Lastly, a refinance may help if you’re struggling to make your car payment each month. Getting a refinance loan with a longer loan term could help reduce your monthly payments. Just remember that an extended repayment period could mean you end up paying more in total interest on the loan.

When shouldn’t you refinance your car?

You may want to hold off on refinancing your car if you’ve already paid off most of your current auto loan, your car is an older model or if the fees will be hefty.If you’ve paid off most of your current loan — Interest is often front-loaded, which means that more of your car payment goes toward interest early on and more goes to principal toward the end of the loan term. If you refinance at the end of your loan, you may not be able to save much in interest.If your car is older or has a lot of mileage — You may have trouble qualifying for a refinance loan if your vehicle is an older model or has a lot of miles on the odometer. Many lenders won’t refinance cars with more than 75,000 to 125,000 miles on them or that are older than five to 10 model years.If you’ll incur a lot of fees — You may want to forego refinancing if the fees outweigh the benefits. Check to see if your current loan has a prepayment penalty. That fee — combined with any refinance fees such as processing, titling and state re-registration fees — can make a refinance more expensive and may cancel out any savings you would have seen with the refinance. Make sure paying these fees would still make sense for you before proceeding with a refinance.

How does auto loan refinancing work?

When you refinance your car loan, you replace your current loan with a new one. The new auto loan will have a new loan term and annual percentage rate. Many banks, credit unions and online lenders offer refinance loans — and the process for getting a refinance loan is similar to getting a loan for a car purchase.Once you shop around, compare refinance loan offers and determine the best deal for you, you’ll need to complete a loan application. If your loan is approved, you can then pay off your original car loan and transfer your title to your new lender. (Your new lender may do one or both of these things for you.)

Does it cost money to refinance a car?

Refinancing a car may come with some costs. If your current lender charges a prepayment penalty fee for paying off your loan early, you’ll be on the hook for that expense.Some lenders may also charge fees for services such as processing paperwork or handling title transfers. If your lender doesn’t handle the title transfer, you’ll need to take care of that yourself and pay any associated fees. Title transfer fees vary by state, so check with your state transportation agency to see how much a transfer costs where you live. Depending on the state, you may have to pay re-registration fees for your car. These fees also vary by state.Some lenders may also charge application or origination fees. Make sure you ask any lenders you’re considering what fees they charge and whether they’re included in your loan amount.

Can you refinance your car loan with the same lender?

It depends on your lender. Some lenders will refinance auto loans they issued, while others won’t. For example, Capital One and PenFed Credit Union won’t refinance their own loans. But Bank of America will. If you’re considering an auto refinance, check with your current lender first to see if it will refinance its own car loans and at competitive terms.

Does refinancing a car hurt your credit?

An auto refinance can temporarily lower your credit scores in a couple ways.Hard credit check — When you apply for a refinance loan, lenders will perform a hard inquiry to check your credit history and scores. A hard inquiry can cause a slight drop in your credit scores. If you’re shopping around for a refinance loan and applying with multiple lenders, be sure to submit your applications within a 14-day period. While the time frame can differ, many credit-scoring models consider multiple inquiries within a 14-day window as just one inquiry, which will minimize the impact on your credit scores.Account closing — After you refinance, your original car loan will be closed. This can affect your credit scores because credit-scoring models consider the length of the accounts on your credit reports.New credit — If you’ve recently applied for and taken out other loans or credit, your credit scores could take a hit. Credit-scoring models consider several new accounts within a short time period to suggest a greater risk.While these factors can lower your credit scores, an auto refinance could help improve your credit in the long run if you make consistent, on-time payments on your new car loan. Your payment history is the biggest factor in calculating your credit scores.