Where to refinance your auto loan depends on what matters most to you

Auto loan refinancing means taking out a new loan to pay off your existing car loan, usually to get a lower interest rate or change your loan term. Different lenders — banks, credit unions, and online lenders — offer different rates, approval speeds, and customer service approaches. There is no single "best" company because the right choice depends on your credit score, how much you owe, how quickly you need the money, and whether you value in-person service or prefer handling everything online.

The lenders described below represent different categories of where people refinance. Each has real tradeoffs. A bank might offer the lowest rate if you have excellent credit and an existing relationship there. A credit union might offer better rates to members but require you to join first. An online lender might approve you in hours but charge more if your credit is fair. Reading through these options will help you understand what to expect when you contact lenders yourself.

Key Takeaways

  • Banks, credit unions, and online lenders all refinance auto loans, but they use different approval processes and serve different borrowers — banks favor strong credit, credit unions favor members, and online lenders often work with fair credit.
  • Your interest rate depends mostly on your credit score, the age and mileage of your car, and how much you still owe, not on which company you choose.
  • Getting quotes from multiple lenders takes 15 to 30 minutes per lender and does not hurt your credit score when done within a two-week window.
  • Approval timelines range from same-day (online lenders) to one week (banks and credit unions), so if you need money quickly, online lenders move faster.
  • Read the loan documents carefully before signing — some lenders charge prepayment penalties if you pay off the loan early, and some require gap insurance.

Banks: Lowest rates if you have good credit and an account

Traditional banks like Chase, Bank of America, Wells Fargo, and regional banks in your area refinance auto loans, usually at competitive rates if your credit score is 670 or higher. Many banks offer lower rates to customers who already have a checking or savings account with them. The process process is straightforward — you can start online or visit a branch — and approval typically takes three to seven business days.

The main limitation is that banks tend to decline applications from people with credit scores below 620, or they charge significantly higher rates. Banks also usually require that your car be no more than 10 years old and have fewer than 150,000 miles, though this varies by bank. If you meet these requirements and have an existing relationship with a bank, it is often worth getting a quote there first.

Credit unions: Member-only access, often with lower rates

Credit unions like Navy Federal, Connexus, and PenFed (and thousands of smaller local credit unions) refinance auto loans for their members. Credit union rates are frequently lower than bank rates, especially for borrowers with fair credit. The catch is that you must be a member to borrow, and membership requirements vary — some are open to anyone in a geographic area, some require employment at a specific company, and some require membership in a professional organization.

If you already belong to a credit union, contact them directly to ask about auto refinancing. If you do not, you can search for credit unions you may be may be able to access to join using the CO-OP Network locator or by searching "[your state] credit union membership requirements." Approval at credit unions typically takes five to ten business days, and many offer the option to complete the entire process by phone or mail.

Online lenders: Fastest approval, wider credit range

Online lenders like LendingClub, Upgrade, and SoFi refinance auto loans and often approve borrowers with credit scores as low as 600. The process is entirely online, takes 10 to 15 minutes, and you usually receive a decision within 24 hours — sometimes the same day. Funding often happens within one to three business days after you sign the loan documents.

The tradeoff is that online lenders typically charge higher interest rates than banks or credit unions, especially if your credit score is below 700. They also may not refinance cars older than 12 years or with more than 200,000 miles. Online lenders do not offer in-person service, so if you prefer to speak with someone on the phone or in person, this route is not a good fit.

How to compare offers across lenders

When you contact a lender, you will need your current loan documents (to find your loan balance and remaining term) and your car's details (year, make, model, mileage, and VIN). Have this information ready before you call or start an online process. Most lenders will give you a preliminary rate quote without a hard credit check — this is called a soft inquiry and does not affect your credit score.

Once you have a soft quote, you can decide whether to move forward with a hard credit check, which does appear on your credit report. Hard inquiries from multiple lenders within a 14-day window typically count as a single inquiry for credit scoring purposes, so you can shop around without major damage to your score. Collect at least three quotes before deciding — the difference between a 5.5% rate and a 6.5% rate adds hundreds of dollars over the life of the loan.

When comparing offers, look at the interest rate, the monthly payment, the total interest you will pay over the life of the loan, and any fees (origination fees, prepayment penalties, or documentation fees). Some lenders advertise a low rate but charge an origination fee of $200 to $500, which effectively raises your true cost. Ask each lender for the total amount you will pay by the end of the loan, not just the monthly payment.

What happens after you refinance

Once you sign the refinance loan documents, the new lender pays off your old loan directly. You do not send money anywhere — the lender handles the payoff. Your old lender will send you a final statement showing a zero balance. You will then make payments to your new lender according to the new loan schedule.

Some people refinance to lower their interest rate (and keep the same loan term), which reduces the total interest paid. Others refinance to extend the loan term, which lowers the monthly payment but increases total interest paid. Before you refinance, calculate whether the savings are worth it — if you plan to sell or trade in the car within a year or two, refinancing may not save you money after the lender's fees.

Red flags to watch for when refinancing

Avoid lenders that may provide a specific rate before a hard credit check, charge upfront fees before approval, or pressure you to decide quickly. Legitimate lenders will give you time to review documents and ask questions. If a lender requires you to pay a fee before the loan is funded, that is a sign of a scam.

Read the fine print for prepayment penalties — some lenders charge a fee if you pay off the loan early. This is rare among reputable lenders but does happen. Also check whether the lender requires gap insurance (which covers the difference between what you owe and what the car is worth if it is totaled) — some do, and some do not. Gap insurance is usually optional and costs $15 to $30 per month, so factor that into your comparison.

Frequently Asked Questions

Will refinancing hurt my credit score?

A hard credit inquiry will lower your score by a few points temporarily, usually recovering within a few months. Multiple hard inquiries within 14 days typically count as one inquiry, so shopping around does not multiply the damage. However, refinancing does close your old loan and open a new one, which can affect your credit mix and average account age — the overall impact is usually small and temporary.

Can I refinance if I still owe more than the car is worth?

Yes, but fewer lenders will work with you. You are "underwater" on the loan, meaning you owe more than the car's market value. Most banks and credit unions will refinance underwater loans, but some online lenders will not. Contact lenders directly and be honest about what you owe versus the car's value — they will tell you whether they can help.

How long does the refinancing process take from start to finish?

Online lenders can fund within one to three business days after you sign. Banks and credit unions typically take five to ten business days. The longest part is usually waiting for your old lender to process the payoff, which can take a few days after the new lender sends the payment. During this time, you may receive bills from both lenders — this is normal and will resolve once the old loan is fully paid off.

What if my car is too old or has too many miles?

Most lenders have age and mileage limits, but they vary. Banks often cap at 10 years old and 150,000 miles. Credit unions and online lenders are sometimes more flexible, going up to 12 or 15 years old and 200,000 or more miles. If your car does not meet one lender's requirements, try another — you may still find options.

Should I refinance if I only have a year left on my loan?

Probably not. Refinancing involves fees and a hard credit inquiry, and you will not have time to recoup those costs if the loan ends soon. Calculate the total interest you will save by refinancing versus the fees you will pay — if the savings are less than $200 to $300, it is not worth it.