Borrowers with a solid credit history can take advantage of LightStream's competitive interest rates.
Refinancing an auto loan is one method by which you can save money on interest and reduce the amount you have to pay for your automobile each month. It might be possible for you to reduce the overall cost of your auto loan, including the interest rate, the length of the loan, and the monthly payment, by refinancing it. This is especially true if your credit score is higher now than it was when you first took out the loan.
The best banks and lenders who provide auto loan refinancing provide flexible loans with competitive rates. When you seek to have your existing auto loan refinanced, there are a lot of factors that your lender will look at. These include the age and mileage of your vehicle, the amount of your existing loan, your credit score, the interest rate on your loan, and the length of your existing loan.
The Best Banks to Refinance Your Car Loan in 2022
- Highly Recommended for Excellent Credit: LightStream
- Highly Recommended for Checking Rates Without Affecting Your Credit Score: Capital One
- Highly Recommended for Most Trusted Name: Bank of America
- Highly Recommended for Flexibility: AutoPay
- Highly Recommended for Those in the Military: USAA
- Highly Recommended for Peer to Peer Loans: LendingClub
- Highly Recommended Credit Union: Consumers Credit Union
Highly Recommended for Excellent Credit: LightStream
- STARTING ANNUAL PERCENTAGE RATE (APR): 4.99 percent* with AutoPay and excellent credit
- MINIMUM REQUIRED CREDIT SCORE: 660
- LOAN TERMS RANGE: 24 to 84 months*
Why do we recommend it?
When it comes to auto loan refinancing, our top recommendation goes to Lightstream for consumers with excellent credit. The lender provides rates that are among the most aggressive in the industry, and loans are accessible in all fifty states.
Advantages and Disadvantages
Lightstream –– the advantages
- Costly interest rates
- Simple application process available online
- Easily accessible in all fifty states.
Lightstream –– the disadvantages
- Lightstream will check your credit carefully after you fill out the application.
- Only offered to debtors who have a solid credit history.
Overview
Now is the moment to go out and acquire a reduced interest rate on your auto loan, regardless of whether you've had it for years or whether it's the result of a lot of hard work and dedication to paying off your debts and boosting your income. If you have excellent credit, you should make the most of the opportunities that come your way. LightStream falls under Truist Bank, which provides financial services to customers that have good to excellent credit; the minimum FICO score required to apply for a loan through LightStream is 660. They will execute a hard draw on your credit when you submit an application. Therefore, you should be ready to make a decision when you do so. Your credit score might drop slightly as a result of hard inquiries, but this shouldn't be too much of a concern as long as you don't apply for new credit very frequently. The annual percentage rate (APR) of debts refinanced through LightStream begins at just 4.99 percent, and the company serves all 50 states.
Highly Recommended for Checking Rates Without Affecting Your Credit Score: Capital One
- STARTING ANNUAL PERCENTAGE RATE (APR): Varies
- MINIMUM REQUIRED CREDIT SCORE: None required
- LOAN TERMS RANGE: Varies
Why do we recommend it?
Because Capital One allows you to prequalify for an auto loan refinance without negatively impacting your credit, it is an excellent option for consumers who are interested in investigating their many available choices.
Advantages and Disadvantages
Capital One –– the advantages
- Prequalification of borrowers is possible.
- Simple application procedure online
- No application fee is required.
Capital One –– the disadvantages
- The lowest possible loan amount is $7,500.
- imposes an adjustable fee for the transfer of the title
Overview
You can check to see if you are eligible to refinance your loan by filling out the straightforward questionnaire provided by Capital One. Doing so will not have any bearing whatsoever on your credit score. You might need to owe a bit more than the other loan refinancing options on this list, at least $7,500; however, you will be able to see what sort of rates you'd get and prequalify without a hard credit check impacting your credit score. This is an advantage over some of the other loan refinancing options on this list. After you have determined that you are eligible for a loan, the next step is to fill out an application for credit, which requires you to choose the term of the loan as well as the annual percentage rate. This will be included in the consumer credit record that you have. The provision of your vehicle identification number (VIN) will seal the purchase. Sign the agreement electronically, give information about your lender, and send in any supporting documents you can, such as proof that you have insurance. Capital One waives the application price; however, the amount that is required to transfer the title varies depending on the state. Because Capital One will cover the cost of the fee and include it in your total loan amount, you won't have to pay anything out of pocket when you refinance your mortgage via them.
Highly Recommended for Most Trusted Name: Bank of America
- STARTING ANNUAL PERCENTAGE RATE (APR): 3.29 percent
- MINIMUM REQUIRED CREDIT SCORE: None required
- LOAN TERMS RANGE: 48 to 78 months
Why do we recommend it?
Borrowers who want to work with an established traditional bank that has locations all over the place might consider refinancing their auto loan with Bank of America because of its vast availability.
Advantages and Disadvantages
Bank of America –– the advantages
- A reputable and reliable financial institution
- Quick application decision
- Preferred Rewards members are eligible for a discount.
Bank of America –– the disadvantages
- The vehicle must be less than ten years old at the time of purchase.
- The vehicle's odometer must have fewer than 125,000 kilometers on it.
- The minimum amount that you can borrow is $7,500 (or $8,000 in Minnesota).
Overview
If you choose to refinance your auto loan with Bank of America, you will be working with a reliable financial institution, and you will receive a decision in far less time than it takes you to tie your shoes. Once you are accepted into the Bank of America family, there is no charge for the application process. You will be able to access all the helpful online resources they provide. To be considered, your vehicle must be less than 10 years old, have fewer than 125,000 miles on it, and have at least $7,500 left on loan. In addition, you will need to have less than 125,000 miles on it. The annual percentage rate (APR) offered by Bank of America for refinancing a vehicle is now 3.29 percent. Compare the pricing, then utilize a vehicle loan calculator to assist you in determining the amount of money you will save. If you want to take advantage of reduced monthly payments, lower interest rates, or save money on financing fees, it is sensible to pay off your previous loan with the profits from a new loan.
Highly Recommended for Flexibility: AutoPay
- STARTING ANNUAL PERCENTAGE RATE (APR): 1.99 percent
- MINIMUM REQUIRED CREDIT SCORE: None
- LOAN TERMS RANGE: Varies
Why do we recommend it?
AutoPay provides adaptable auto loan refinancing with various alternatives available to all borrowers, resulting in an average monthly savings of $96.
Advantages and Disadvantages
AutoPay –– the advantages
- Simple steps for submitting an application
- Compare the terms of loans offered by several creditors using only one application.
- Cost avoidance of $96 on average per month
AutoPay –– the advantages
- There are several limits placed on vehicles.
- Essential prerequisites for a minimum monthly income
Overview
Because they are experts in the field of auto loan refinancing, it should come as no surprise that AutoPay provides excellent deals to a large number of customers. They frequently cater to customers who have improved their credit score since they took out their initial auto loan. As a result, they are typically able to offer loans at drastically discounted rates because of this. You don't have to fill out several applications because their website allows you to compare loan offers from a wide variety of lenders in one convenient location. They will also run a soft check on your credit, which is less damaging to your score and a good choice if you are not sure that you want to refinance your loan right this second (after you choose a final offer, however, they will run a hard pull on your credit, but they won't do so until you are ready to make a commitment). AutoPay makes it simple to compare different payment options and frequently collaborates with credit unions. AutoPay offers a rate as low as 1.99 percent, but in order to qualify for this rate, you need to have a credit score in the highest possible category. The typical client will notice a reduction in their interest rate of 6.99 percentage points. When attempting to estimate the annual percentage rate (APR) that you would be charged to refinance a car loan, it is beneficial to have prior knowledge about your credit score.
Highly Recommended for Those in the Military: USAA
- STARTING ANNUAL PERCENTAGE RATE (APR): Not advertised
- MINIMUM REQUIRED CREDIT SCORE: None
- LOAN TERMS RANGE: Varies
Why do we recommend it?
Refinancing an auto loan with USAA is an excellent alternative for members of the military and their families since the company offers rates that are fair and gives you the option to take your car overseas. At the same time, you are deployed, moving, or going on vacation.
Advantages and Disadvantages
USAA –– the advantages
- Discount for autopay users
- There will be no payments for up to sixty days.
- Simple steps for submitting an application
USAA –– the disadvantages
- Only available to members of the USAA.
- Prequalification of borrowers is not possible.
Overview
The United Services Automobile Association (USAA) is a group that only works with members of the military and their families. However, for those who serve our country, this almost 100-year-old organization provides pricing and customer service that are frequently difficult to beat. If you are behind on your payments, you will have up to one month after you begin the loan before you are required to make a payment. This will give you time to get caught up. If you want to purchase additional coverage for your vehicle, you can select one of many different protection plans offered by the company. Refinancing options for up to 60 months are available through USAA, and lengthier terms are also available. By dealing directly with your lender, USAA eliminates much of the bother that is associated with refinancing. Their purchase loan rates are among the most competitive in the market, yet they do not advertise their refinance rates. The interest rates are variable and may change at any time without prior notice. They also differ according to the accepted credit type and other parameters such as the loan amount, term, and model year.
Highly Recommended for Peer to Peer Loans: LendingClub
- STARTING ANNUAL PERCENTAGE RATE (APR): Quote required
- MINIMUM REQUIRED CREDIT SCORE: None required
- LOAN TERMS RANGE: 24 to 84 months
Why do we recommend it?
Peer-to-peer loans are available through LendingClub, which features a streamlined application procedure, competitive interest rates, and a selection of flexible financing alternatives.
Advantages and Disadvantages
LendingClub –– the advantages
- Loans for consumers with bad credit are available.
- Flexible loan terms
- Simple steps for submitting an application
LendingClub –– the disadvantages
- The minimum amount that can be borrowed is $4,000.
- Borrowers with low credit ratings are charged higher interest rates.
- Refinancing your car loan is only available in 35 states.
Overview
P2P (peer-to-peer) lending is a non-traditional option, yet, it is a fantastic choice for individuals who like the concept of dealing directly with an individual lender for a predetermined amount of time. After submitting an application, you will typically be given a choice between two different possibilities and given the opportunity to select the one that is more appealing to you. It is important to remember that LendingClub is not a good choice for individuals with a relatively little balance remaining on their current auto loan. Although the company offers loans of up to $55,000, they would not lend you less than $4,000 for this purpose. They do make loans available to individuals with lower credit scores; nevertheless, the interest rates and fees associated with these loans are incredibly high. The best interest rates will only be available to consumers with excellent credit history. LendingClub is the preferred alternative of many borrowers due to the competitive interest rates offered and the reduced amount of paperwork required in comparison to more conventional sources of funding. They provide a helpful service, and no concealed costs or prepayment penalties are involved.
Highly Recommended Credit Union: Consumers Credit Union
- STARTING ANNUAL PERCENTAGE RATE (APR): 2.74 percent
- MINIMUM REQUIRED CREDIT SCORE: Information unavailable
- LOAN TERMS RANGE: 12 to 78 months
Why do we recommend it?
Consumers Credit Union is a fantastic choice for consumers who are interested in securing an auto loan refinance from a credit union because the parameters of the loan are flexible and the rates are competitive.
Advantages and Disadvantages
Consumers Credit Union –– the advantages
- The smallest possible loan amount is $1,000.
- Prices that are competitive
- Flexible loan options
Consumers Credit Union –– the disadvantages
- In order to apply, membership is required.
- Prequalification of borrowers is not possible.
- The preferred payment alternatives are only available to borrowers with Good to Excellent credit ratings.
Overview
In order to use the services of Consumers Credit Union to refinance your auto loan, you will first need to become a credit union member, as is the case with all other credit unions. However, once you become a member, the benefits will become immediately apparent to you. They are willing to lend you as little as $1,000 for as few as 12 months, which is a significant departure from the lending policies of many other financial institutions. This is especially true if you do not need to borrow significant money. Because they will perform a strong draw on your credit, you should ensure that you are serious about refinancing before finding out what rate they will provide you; otherwise, your credit may suffer as a result. However, once companies check your credit, the likelihood of them working with you increases significantly if your score exceeds 640. When it comes to newer automobiles, the APR can be as low as 2.74 percent, but when it comes to refinancing, this rate could not be available.
Final Verdict
When looking to refinance a vehicle loan, there are many different banks and lenders from which to choose. Some lenders stand out due to the simplicity of their online application process, while others are known for their ability to offer refinancing choices to consumers even with poor credit. LightStream is considered our best pick for a lender to use when refinancing a car loan.
LightStream has some of the lowest and most affordable auto loan refinancing rates for qualifying clients with a history of strong credit and consistent income. They have a straightforward application process that can be completed online, there are no limits placed on age or miles, and funding may be obtained as soon as the same business day.
Examine the Leading Financial Institutions That Can Refinance Your Car Loan
COMPANY
|
CATEGORY
|
STARTING APR
|
MINIMUM CREDIT SCORE
|
LOAN TERMS (RANGE)
|
MAXIMUM LOAN AMOUNT
|
| LightStream |
Highly Recommended for Excellent Credit |
4.99%* with Auto Pay & Excellent Credit |
660 |
24 to 84 months* |
$100,000 |
| Capital One |
Highly Recommended for Checking Rates Without Affecting Your Credit Score |
Varies |
None |
Varies |
$50,000 |
| Bank of America |
Highly Recommended for Most Trusted Name |
3.39% |
None |
48 to 72 months |
Not available |
| AutoPay |
Highly Recommended for Flexibility |
1.99% |
None |
Varies |
Not available |
| USAA |
Highly Recommended for Those in the Military |
Varies |
None |
Varies |
Not available |
| LendingClub |
Highly Recommended for Peer to Peer Loans |
Varies |
None |
24 to 84 months |
$55,000 |
| Consumers Credit Union |
Highly Recommended Credit Union |
2.74% |
None |
12 to 78 months |
Not available |
A Guide to Selecting the Right Bank to Refinance Your Car Loan
When You Should Think About Refinancing Your Current Auto Loan
If it has been some time since you took out your auto loan and your credit score has increased in that time, you should seriously consider refinancing the loan. If you have a higher credit score, you may be eligible for lower interest rates, which may save you money on interest costs over the course of the loan. If, on the other hand, your credit score has dropped, you might wish to postpone the process of refinancing a loan.
Compare Different Banks That Will Refinance Your Car Loan
It is essential to select a financial institution that caters to your requirements if you want the process of refinancing your car loan to be successful. When assessing various lending options, some factors to take into consideration are as follows:
Rates
The interest you save will directly correlate to how low the rates are. Be sure to investigate a number of different lending options in order to secure the most favorable interest rates.
Minimum credit score required
Some lenders have minimum credit score requirements.
Restrictions placed on vehicles
Some financial institutions, such as banks and lenders, are willing to deal with any vehicle, while others have particular requirements for the vehicle's age, mileage, and kind.
Options for prequalification are available
If it is at all possible, you should look for a lender that can let you prequalify for a refinanced auto loan without having the process impact your credit score.
Application process
Try to choose a lending company that has a straightforward application process and provides financing in a short amount of time.
Assistance to customers
It would be best if you found a lender with a track record of providing excellent customer service and a high level of client satisfaction.
Submit an Application to Refinance Your Car Loan
It would be best if you were sure that your personal finances are in order before you can even consider applying for a refinance on your car loan. Prior to making an application to refinance an existing vehicle loan, you should work toward achieving a high credit score, a low debt to income ratio, and a track record of consistent income.
You will need to have a few different documents on hand in order to submit an application to refinance your existing auto loan. Personal information such as your name, address, and Social Security number, as well as evidence of insurance, information about your existing loan and lender, the brand and model of your car, its age, and the mileage it has been driven, are all examples of this type of information.
Before submitting an application, you may be able to see your available loan alternatives and get prequalified with some lenders. Once you select a lender, you can submit your application for an auto refinance loan. In some circumstances, you might be approved for cash as quickly as the next working day.
Frequently Asked Questions (FAQs)
How does the process of refinancing an automobile loan work?
When you take out a new vehicle loan to pay off your existing auto loan, this transaction is referred to as a "refinance." The goal of a refinance is to obtain a cheaper interest rate. The new loan will pay off your existing loan, and you will be required to sign new documentation, agree to new terms and conditions, and pay a new interest rate.
You should consider refinancing your car loan if you are dissatisfied with the interest rate or the terms of the loan or if your credit score has dramatically improved since you first took out the loan. In most cases, refinancing is done in order to save money; nevertheless, you should be aware that there are expenses associated with refinancing.
In order to refinance an existing auto loan, what are the requirements?
When it comes to refinancing a vehicle loan, different lenders have different requirements; however, the majority of them require that you:
Wait at least sixty to ninety days after the original loan so that the title can be transferred to the new owner of your vehicle.
Maintain a credit score above the one the lender has deemed acceptable (typically 660 or higher)
Identify yourself and produce documentation to verify your income.
Have a vehicle with fewer than a specified amount of miles on the odometer (some lenders require under 125,000 miles and under 10 years old)
What are the fees involved in refinancing an existing auto loan?
Each auto lender has its own set of requirements to meet before agreeing to refinance a car loan, and they all charge various fees for the service. You may be required to pay processing and origination fees by specific car lenders in order to complete the refinancing paperwork, and your initial lender may assess a prepayment penalty against you. On the other hand, there are some lenders who do not charge any costs; therefore, you will want to check out this information in advance.
Methodology
After conducting in-depth research and analysis on a number of financial institutions offering auto loan refinancing, we narrowed the field down to seven strong candidates before making our final decision. We narrowed our choices down to the most acceptable accessible alternatives by considering factors such as the minimum required credit score, the organization's reputation, the kinds of choices and prices available, and more.
