Where to refinance your car loan

Banks that refinance car loans fall into three categories: traditional banks where you may already have accounts, credit unions, and online lenders. Not every bank offers refinancing—many focus only on new car purchases—so you need to contact them directly or check their website for a refinance product. The lenders most likely to refinance are those that already made your original loan, because they have your payment history and can move faster.

Your current lender should be your first call. If they refinance, they already know your credit file and can often approve you in days rather than weeks. If they decline or offer a rate that doesn't improve your situation, move to banks where you have existing accounts—they may offer member discounts or streamlined approval. After that, credit unions and online lenders become worth comparing, because they often have lower rates than traditional banks, though approval takes longer.

Key Takeaways

  • Your current lender can refinance your loan fastest because they already have your file, and many will do so even if your credit has not improved.
  • Banks, credit unions, and online lenders all refinance car loans, but not all of them advertise it—you may need to call or visit their website to find out.
  • Credit unions typically offer lower rates than banks, but you must be a member, and membership requirements vary by location and employer.
  • Online lenders approve quickly but may charge higher rates if your credit score is below 700, so compare their offers against at least one bank or credit union.
  • Getting quotes from multiple lenders takes a few days but does not hurt your credit score if you do it within 14 days, because the inquiries count as one process.

Traditional banks and their refinance programs

Most large national banks—Bank of America, Wells Fargo, Chase, Citibank—offer auto refinancing, but the product is not always straightforward to find on their websites. Call the customer service number on your statement or visit a branch to ask whether they refinance existing loans from other lenders. Some banks only refinance loans they originated, so you may hear no from the first bank you contact.

Regional and community banks often have more flexible refinance programs than national chains, especially if you have been a customer for years. They may refinance loans with higher mileage or older vehicles that national banks decline. The trade-off is that their rates may be higher, and approval can take longer because they do more manual underwriting. Ask your bank whether they offer a rate discount for customers with direct deposit or multiple accounts.

Banks typically require a minimum credit score between 620 and 680 to refinance, though better rates start at 700 or above. They will pull your credit report, verify your income, and confirm the vehicle's value using NADA Guides or Kelley Blue Book. The entire process usually takes 5 to 10 business days from process to funding.

Credit unions and membership requirements

Credit unions almost always offer lower rates than banks on auto refinancing, sometimes by 1 to 2 percentage points. The catch is that you must be a member to borrow from them. Membership requirements vary widely: some credit unions accept anyone in a geographic area, others require employment at a specific company, and some are tied to military service, education, or professional associations.

If you are not already a member of a credit union, search the CO-OP Network or Shared Branch locator to find one you can join. Many employers offer credit union membership as a benefit, so check with your HR department first. Once you join, you can refinance when ready, and credit unions often have no prepayment penalties if you want to pay off the loan early.

Credit unions typically approve refinancing within 3 to 5 business days and may offer rates to borrowers with credit scores as low as 600. They are also more likely than banks to refinance vehicles with higher mileage or older model years. Ask about their rate discount for automatic payments—many credit unions drop your rate by 0.25 to 0.5 percent if you set up direct debit from a checking account.

Online lenders and their approval speed

Online lenders like LendingClub, Upgrade, and Lightstream approve refinancing applications in 24 to 48 hours and fund within 3 to 5 business days. They use automated underwriting, so you get a decision quickly without visiting a branch. Most online lenders will refinance vehicles up to 10 years old and accept credit scores as low as 580, though rates for lower scores are significantly higher.

The downside of online lenders is that their rates are often higher than banks or credit unions, especially if your credit score is below 700. They also charge origination fees—typically 0 to 8 percent of the loan amount—which get added to your new loan balance. Before accepting an offer from an online lender, compare the total cost (interest plus fees) against at least one bank or credit union quote.

Online lenders do not require you to have an existing account with them, and the entire process happens on their website. You upload your driver's license, proof of income, and vehicle registration. Some online lenders will refinance loans with negative equity (owing more than the car is worth), though at a higher rate.

How to compare offers from multiple lenders

Gather quotes from at least three lenders: your current lender, one bank or credit union, and one online lender. Each lender will give you an estimated rate and monthly payment based on a soft credit pull that does not affect your score. Ask each lender for the same information: the interest rate, any origination or processing fees, the loan term (36, 48, 60, or 72 months), and whether there is a prepayment penalty.

When you are ready to move forward, submit formal applications to the lenders you want to compare. Multiple hard credit inquiries within 14 days count as a single process for scoring purposes, so your credit score will drop only 5 to 10 points rather than 30 to 50. After 14 days, each new inquiry is treated separately and will lower your score more.

Calculate the total interest you will pay over the life of each loan, not just the monthly payment. A lower monthly payment sometimes means a longer loan term and more total interest. Use the lender's loan calculator or ask them to provide the total amount of interest you will pay. The goal is to lower your monthly payment, your interest rate, or both—if refinancing does none of these, decline the offer.

Lenders that refinance vehicles with poor credit or high mileage

If your credit score is below 620 or your vehicle has more than 100,000 miles, some mainstream lenders will decline you. Credit unions are usually the most flexible option in this situation, because they focus on member relationships rather than automated scoring. Call a few credit unions in your area and ask whether they refinance loans for members with lower credit scores or higher-mileage vehicles.

Some online lenders specialize in refinancing for borrowers with credit challenges. LendingClub and Upgrade both work with credit scores below 600, though rates will be higher. Verify that the lender will refinance your specific vehicle before you explore—some have age or mileage limits that disqualify older cars.

If you cannot find a lender willing to refinance, you have two options: wait 6 to 12 months while you improve your credit score by making on-time payments, or accept a higher rate now and refinance again later when your score improves. Refinancing twice costs more in fees, but it may be worth it if your current rate is very high.

What happens after you refinance

Once a lender approves your refinance, they pay off your original loan in full and issue you a new loan agreement. The original lender receives the payoff and closes your account. You will make payments to the new lender going forward, not your original lender. This process takes 3 to 7 business days after approval, during which you should continue making payments to your original lender as scheduled.

Your vehicle title remains in your name throughout the refinance. If your original loan had a lien on the title (meaning the lender held it as collateral), the new lender will take possession of the title until you pay off the new loan. You do not need to do anything—the lenders handle the title transfer between themselves.

After refinancing, review your new loan documents carefully. Verify the interest rate, loan term, monthly payment, and payoff date match what you were quoted. Check that there are no prepayment penalties if you want to pay off the loan early. Keep your new loan agreement and payment schedule for your records.

Frequently Asked Questions

Can I refinance a car loan if I still owe more than it is worth?

Yes, but most banks and credit unions will not refinance negative equity. Online lenders like LendingClub and Upgrade sometimes will, though they charge a higher rate to cover the risk. Your best option is to wait until you have paid down the loan enough that you owe less than the car's current value, then refinance with a traditional lender at a better rate.

How many times can I refinance the same car loan?

There is no legal limit, but refinancing multiple times costs money in fees and can lower your credit score each time. Refinance only when it makes financial sense—when you can lower your rate by at least 0.5 to 1 percent or reduce your monthly payment significantly. Most people refinance once or twice over the life of a car loan.

What if my current lender will not refinance my loan?

Some lenders only refinance loans they originated. If your current lender declines, move to banks where you have accounts, then credit unions, then online lenders. You can refinance with any lender, not just your original one. Getting declined by one lender does not affect your ability to explore elsewhere.

Do I need to have the car paid off to refinance?

No. Refinancing means replacing your existing loan with a new one from a different lender. The new lender pays off the old loan in full, and you start making payments to them. You keep the car throughout the process.

Will refinancing hurt my credit score?

A hard credit inquiry will lower your score by 5 to 10 points temporarily. Multiple inquiries within 14 days count as one process, so explore to several lenders within that window if you want to compare. Your score will recover within a few months as you make on-time payments to your new lender.