What LendingClub Auto Refinance Does
LendingClub auto refinance is a loan product that lets you replace your current car loan with a new one from LendingClub, typically to lower your monthly payment or interest rate. You borrow money from LendingClub, use it to pay off your existing auto loan in full, and then repay LendingClub on a new schedule. The process is straightforward: LendingClub pays your old lender directly, you sign new loan documents, and your car title remains with you (or your new lender, depending on your state).
The main reason people refinance is to reduce what they pay each month or over the life of the loan. This happens when LendingClub offers you a lower interest rate than your current lender, or when you extend the loan term. A lower rate saves you money on interest; a longer term lowers your monthly payment but costs more overall. LendingClub also refinances loans for borrowers whose credit has improved since they took out the original loan, or who want to consolidate a car loan with other debts into a single payment.
Key Takeaways
- LendingClub refinances existing auto loans by paying off your current lender and issuing you a new loan with different terms.
- Your interest rate and monthly payment depend on your credit score, income, debt-to-income ratio, and the age and mileage of your vehicle.
- The process typically takes 3 to 7 business days from approval to funding, though some lenders can close faster.
- You can refinance as long as your car is worth at least as much as you owe, and most vehicles must be 2010 or newer.
- Refinancing costs nothing upfront, but you may pay a small fee if you pay off the loan early, depending on your agreement.
Who Can Refinance Through LendingClub
LendingClub has basic requirements for who can refinance. You must be at least 18 years old, a U.S. citizen or permanent resident, and have a valid Social Security number. Your car must be financed (not owned outright), and in most cases it must be a 2010 model year or newer. LendingClub also requires that your vehicle's current value be at least equal to what you still owe on it — this is called being "in the money" or having positive equity.
Your credit score matters, but LendingClub works with borrowers across a range of credit profiles. Borrowers with higher credit scores typically receive lower interest rates. LendingClub also looks at your income and existing debts to make sure you can afford the new payment. If you have recently missed payments on your current auto loan, or if you are in default, refinancing may not be an option until you bring the account current.
How Interest Rates and Terms Are Set
LendingClub does not publish a single interest rate for auto refinance. Instead, the rate you receive depends on several factors: your credit score, your income, your debt-to-income ratio (how much you owe compared to what you earn), the age and mileage of your car, and the loan term you choose. Borrowers with excellent credit and low debt typically receive the lowest rates; those with fair or poor credit pay more.
Loan terms at LendingClub usually range from 24 to 84 months. A shorter term (24 to 36 months) means higher monthly payments but less interest paid overall. A longer term (60 to 84 months) lowers your monthly payment but increases the total interest you pay. When you get a rate quote, LendingClub shows you the estimated interest rate, monthly payment, and total interest cost for each term option so you can compare.
The Refinancing Process and Timeline
The process begins with a soft credit inquiry — a check that does not affect your credit score — to give you an estimate. You provide basic information: your current loan details, vehicle information, income, and employment. LendingClub then shows you estimated rates and terms without requiring a formal process.
If you decide to move forward, you complete a full process. This triggers a hard credit inquiry, which does show on your credit report. LendingClub verifies your income, employment, and vehicle details. Once approved, you receive loan documents to sign electronically. LendingClub then contacts your current lender to arrange payoff and sends the funds directly to them. The entire process from approval to funding typically takes 3 to 7 business days, though some closings happen faster.
After LendingClub pays off your old loan, you receive confirmation from your original lender that the loan is closed. Your new loan with LendingClub begins, and your monthly payments go to LendingClub on the schedule you agreed to. If your state requires a title transfer, LendingClub handles that paperwork.
Costs and Fees to Know About
LendingClub does not charge an origination fee, process fee, or prepayment penalty for most auto refinance loans. This means there is no upfront cost to refinance, and you can pay off the loan early without penalty. However, you should always confirm the specific terms of your loan agreement, as some loan products may include fees depending on your situation or state.
The main cost is the interest you pay over the life of the loan. This is why comparing the total interest cost across different term lengths matters. A longer loan term lowers your monthly payment but increases total interest; a shorter term does the opposite. LendingClub's quote shows you the total interest for each option so you can decide what works for your budget.
When Refinancing Makes Financial Sense
Refinancing is worth considering if your new interest rate is at least 0.5 to 1 percentage point lower than your current rate, or if you need to lower your monthly payment to fit your budget. The longer you keep the loan, the more interest savings matter. If you plan to pay off the car in the next year or two, refinancing may not save enough to be worthwhile.
Refinancing also makes sense if your credit has improved significantly since you took out your original loan. A higher credit score can unlock a much lower rate. Similarly, if you have paid down other debts and your debt-to-income ratio has improved, you may now may have access to for better terms than before.
Refinancing does not make sense if you are underwater on your loan (owe more than the car is worth), if your car is very old or has very high mileage, or if you are planning to sell or trade in the vehicle soon. In those cases, the refinancing process takes time and costs you nothing, but the benefit is small or nonexistent.
How LendingClub Compares to Other Refinance Lenders
LendingClub is one of several online lenders offering auto refinance, alongside companies like Lightstream, SoFi, and Earnin. Traditional banks and credit unions also refinance auto loans. The main differences are in interest rates, loan terms offered, vehicle age requirements, and how quickly they close loans.
LendingClub typically offers rates competitive with other online lenders and does not charge origination or prepayment fees. Some credit unions offer lower rates to members, but require membership. Banks may have stricter vehicle age requirements or longer processing times. Online lenders like LendingClub generally close faster than banks but may have higher rates for borrowers with lower credit scores. Getting quotes from multiple lenders lets you compare the actual rate and monthly payment you would receive, not just advertised ranges.
Frequently Asked Questions
Can I refinance if I am still making payments on my current loan?
Yes. In fact, most people refinance while still actively paying their original loan. LendingClub pays off your current lender in full, and you then owe LendingClub instead. You do not need to wait until the loan is nearly paid off.
What happens to my credit score when I refinance?
A hard credit inquiry lowers your score by a few points temporarily, usually recovering within a few months. Refinancing also closes one loan and opens another, which can cause a small dip. However, if the new loan has a lower payment and you keep making on-time payments, your credit typically improves over time.
How long does the refinancing process take?
From approval to funding usually takes 3 to 7 business days. The exact timeline depends on how quickly you return signed documents and how quickly your current lender processes the payoff. Some lenders close faster; others may take longer.
What if my car is worth less than I owe on it?
Most lenders, including LendingClub, do not refinance loans where you owe more than the car is worth. You would need to pay down the loan or wait until the car's value rises before refinancing becomes an option.
Can I refinance a loan I just took out?
Technically yes, but it rarely makes sense. Most lenders prefer that you have held the original loan for at least 6 to 12 months before refinancing. Refinancing too soon after purchase may result in higher rates or denial, and the savings would be minimal.