Auto loan refinance rates change daily and depend on your credit score, loan term, and lender

The rate you see advertised online is not the rate you will get. Refinance rates vary by lender, by the age and mileage of your car, by how much you still owe, and most importantly by your credit score. A borrower with a 750 credit score might see rates starting at 5.5 percent from a credit union, while someone with a 620 score might see 9.2 percent from the same lender. Banks, credit unions, and online lenders all post different rates on the same day.

The only way to know what rate you personally may have access to for is to request quotes from multiple lenders. Most lenders let you check your rate without a hard credit inquiry — meaning it does not affect your credit score — so you can shop around freely. The process takes 10 to 15 minutes per lender and gives you real numbers to compare.

Key Takeaways

  • Refinance rates are updated daily by each lender and depend on your credit score, the age of your vehicle, and how much you still owe on the loan.
  • You can request rate quotes from banks, credit unions, and online lenders without a hard credit inquiry, so shopping around does not lower your score.
  • The best rate is usually found by checking your own bank or credit union first, then comparing to at least two online lenders.
  • Refinancing saves money only if the new rate is at least 1 percent lower than your current rate and you keep the car long enough to recoup any fees.

Where lenders post their current rates

Banks and credit unions update rates on their websites daily, usually in the morning. If you already have an account at a bank or credit union, log in and look for "auto refinance" or "auto loan rates" — your existing customer status often qualifies you for a slightly better rate than a new customer would receive. Call the loan department directly if you cannot find the rate page; they can quote you over the phone in five minutes.

Online lenders like LendingClub, Upgrade, and Lightstream post rates on their homepages and update them throughout the day. These lenders typically approve and fund loans faster than traditional banks — often within 24 to 48 hours — but their rates are not always lower. National banks like Wells Fargo, Chase, and Bank of America post rates online but usually require you to be an existing customer to refinance.

Credit unions often have the lowest rates if you are a member, but membership requirements vary. Some are open to anyone in a geographic area; others require employment at a specific company or membership in a professional organization. If you are not currently a member, check whether you may have access to for membership at a credit union in your area — joining takes 10 to 15 minutes and costs nothing.

What affects the rate you are offered

Credit score is the single largest factor. A score above 740 typically qualifies for the lowest advertised rates. A score between 670 and 739 usually sees rates 1 to 2 percent higher. A score below 620 may see rates 3 to 5 percent higher, or may not may have access to at all. You can check your credit score free through AnnualCreditReport.com or through your bank's website.

Loan term affects your rate. A 36-month refinance usually carries a lower rate than a 60-month refinance from the same lender, because the lender's risk is lower over a shorter period. However, a shorter term means a higher monthly payment, so the lowest rate is not always the best choice for your budget.

Vehicle age and mileage matter to lenders. Most lenders will refinance cars up to 10 years old, but rates are lower for newer cars. A car with 80,000 miles may see a slightly higher rate than an identical car with 40,000 miles. Some lenders have a maximum mileage limit — typically 120,000 or 150,000 miles — and will not refinance beyond that.

Loan-to-value ratio (how much you owe compared to what the car is worth) affects your rate. If you owe $15,000 on a car worth $20,000, your ratio is 75 percent and you will see better rates than someone who owes $18,000 on the same car. You can check your car's value free on Kelley Blue Book or NADA Guides.

How to request and compare rate quotes

Gather these details before you start: your current loan balance, your vehicle's year and mileage, your Social Security number, and your annual income. Most lenders ask for these during the quote process. Start with your current bank or credit union, then request quotes from at least two online lenders. Write down each rate, the loan term, any origination fees, and the monthly payment.

When you request a quote, the lender will ask whether you want a soft inquiry or a hard inquiry. Choose soft inquiry — it shows your rate without affecting your credit score. You can do soft inquiries with multiple lenders in the same week without penalty. A hard inquiry (which actually starts the process) does lower your score slightly, so wait until you have decided which lender to use.

Compare the total cost, not just the rate. A loan with a 6 percent rate and a $500 origination fee may cost more over the life of the loan than a 6.2 percent rate with no origination fee. Use the lender's loan calculator or ask them for the total interest you will pay over the full term.

When refinancing actually saves you money

Refinancing makes financial sense only if the new rate is at least 1 percent lower than your current rate. If you currently pay 7 percent and a new lender offers 6.5 percent, the savings are usually too small to justify the fees and paperwork. If you currently pay 8 percent and can get 6.5 percent, refinancing is worth exploring.

Calculate your break-even point: divide any origination fees or closing costs by your monthly savings. If refinancing costs $300 and saves you $50 per month, you break even after six months. If you plan to keep the car for at least two years after refinancing, the math usually works. If you might sell or trade the car within a year, refinancing is probably not worth it.

The best time to refinance is when rates have dropped significantly since you took out your original loan, or when your credit score has improved. If you took out a loan at 9 percent two years ago and your score has risen from 620 to 700, you may now may have access to for 6 percent — a substantial saving. Check rates once or twice a year if you are curious, but do not request hard inquiries more than once every three months.

What happens after you choose a lender

Once you decide to move forward with a lender, they will request a hard inquiry and pull your full credit report. They will also order a title search to confirm you own the car and that there are no liens against it other than your current loan. This process usually takes 24 to 48 hours.

If approved, the lender will contact your current lender to request a payoff amount — the exact balance you owe today, including any accrued interest. The new lender pays off your old loan in full and issues you a new loan for the remaining balance. You will receive new loan documents and a new payment schedule. Your old lender will release the title, and the new lender will hold it until you pay off the new loan.

The entire process from approval to funding typically takes 5 to 10 business days. During this time, you continue making payments to your old lender as usual. Once the new loan funds, you start making payments to the new lender on the new schedule.

Frequently Asked Questions

Do I need to have paid off my current loan for a certain amount of time before I can refinance?

No. You can refinance as soon as your loan is active, even if you took it out last month. However, refinancing very early rarely makes financial sense because you have not yet paid much interest, so the savings are minimal. Most people refinance after at least 6 to 12 months.

What if my car is worth less than what I owe on it?

You are underwater, and refinancing is harder but not impossible. Some lenders will refinance up to 125 percent of the car's value, but rates will be higher. Others will not refinance at all if you owe more than the car is worth. Call lenders directly and ask whether they refinance underwater loans before you request a quote.

Can I refinance if I have missed payments on my current loan?

It depends on how recent the missed payment was. Most lenders require at least 12 months of on-time payments before they will refinance. If you missed a payment within the last year, you will likely be denied or offered a much higher rate. Focus on making on-time payments for the next year, then refinance.

Will refinancing hurt my credit score?

A hard inquiry will lower your score by a few points temporarily, usually recovering within 30 days. Closing your old loan and opening a new one may lower your score slightly because it changes your credit mix and average account age, but the effect is small and temporary. The long-term benefit of a lower interest rate usually outweighs the short-term score dip.

What if I want to shorten my loan term when I refinance?

You can refinance into any term the lender offers, typically 24 to 72 months. Shortening your term (for example, from 60 months to 36 months) will raise your monthly payment but lower your total interest paid. Make sure the new payment fits your budget before you commit.