How to Refinance a Car in 3 Simple Steps (Feb. 2024)

How To Refinance A Car

Cars are an essential part of many people’s daily lives — whether they are commuting to and from work, picking up kids from school, or going grocery shopping. And thankfully, cars these days tend to require much less maintenance than the clunkers of yesteryear. But, cars do occasionally break. And when they do, we take them to a mechanic to get them back in good shape. But what if your car loan is “broken”?

This may be a case where you would want to explore how to refinance a car.

Maybe you’re struggling to meet your monthly payments and therefore need to pay less each month. Or, maybe your credit score has improved and you can qualify for refinancing at a lower interest rate. Whatever the scenario, refinancing your car may be just the ticket to improving your personal finances. If you’re looking to have a specific question answered, skip ahead using one of the links below:

What is Refinancing | When to Refinance | Benefits | Disadvantages
Bad Credit Refinancing |  Auto Refinancers (3) | Cost to Refinance

Step 1: Determine if Refinancing is Right for You

Refinancing your auto loan can be a great way to save money, but you must first ensure that refinancing makes sense for you in light of your particular circumstances and current interest rates. Everybody’s financial situation is unique and depends on many other factors in their lives whether it’s income range or what they value in an automobile. Let’s look at a few basic facts to help you determine if refinancing is a good idea.

What is Refinancing?

Subprime Auto Loans ChartWhen you refinance an auto loan, you take out a new loan secured by your car and use the money to pay off the balance on your existing car loan. You request refinancing by selecting a lender, filling out some forms, and applying the loan amount to pay off a previous car loan. You might apply for more money than you need to retire the previous loan balance and can use the surplus for other purposes.

When to Refinance

Usually, you refinance a car because of some change in your economic world, such as a sudden alteration to your financial condition or to prevailing interest rates. Refinancing can help you keep your car when money is scarce, or save money when your credit improves or rates go down.

Benefits of Refinancing

Getting approved to refinance your car can open up a world of benefits. Here are a few anyone looking to refinance should consider:

  • Decrease your monthly payments: You can reduce your cash outflow each month by refinancing a car loan for a longer term (payback period). By stretching out your payments, you cut your monthly expenditures, allowing you to apply the savings toward other pressing needs.
  • Reduce your interest rate: You might be eligible for a lower interest rate, either because your credit profile has improved and/or interest rates have fallen throughout the economy. In either case, refinancing cuts your monthly interest charges and saves on the overall cost of the loan.
  • Acquire additional funds: You might be able to secure refinancing that not only pays off your old loan but that also puts some extra cash in your hands, to use as you see fit.
  • Skip a payment: You normally get a one-month respite when you refinance your car loan, which might be the pause that refreshes your financial situation.
  • Added flexibility and convenience: You can try to tailor your repayment terms and payment options in a way that is more appropriate to your needs.
  • Sleep better at night: Instead of lying awake at night worrying about how you’ll meet your next car payment, refinance your car and have pleasant dreams.

As you can see, there are many advantages to refinancing, but there are of course a few disadvantages to consider as well.

Disadvantages of Refinancing

Perhaps the biggest disadvantage is the result of extending the loan’s term, which will probably end up costing you more interest in the long run. Although, if you can refinance at a lower interest rate, you might break even or better. The other disadvantage is the possibility of missing out on the best refinancing offer available to you.

How to Refinance a Car with Bad Credit

Bad credit need not be a show-stopper when it comes to refinancing a car. Remember, the car itself is collateral, which makes lending less risky for the lender, especially when compared to an unsecured personal loan. A great way to receive refinancing despite bad credit is to consider using a co-applicant with a better credit rating.

Also, check out lenders that specialize in bad credit refinancing, such as the one shown in the video above, Auto Credit Express.

Step 2: Find a Reputable Auto Refinancer

After considering all of the above, the simplest and most effective way to find a reputable auto refinancer with the best deals is to check out a website that reviews lenders. Our experts have done the heavy lifting so that selecting a good refinancer is quick and easy. You can also check online with the Better Business Bureau for any complaints against an auto refinancer.

3 Best Auto Refinancers

We’ve researched and rated the best auto refinance options available for folks in every credit situation, and highly recommend the following three:

  • Network of dealer partners has closed $1 billion in bad credit auto loans
  • Specializes in bad credit, no credit, bankruptcy and repossession
  • In business since 1999
  • Easy, 30-second pre-qualification form
  • Bad credit applicants must have $1500/month income to qualify
  • See application, terms, and details.


Overall Rating

Interest Rate In Business Since Application Length Reputation Score
3.99% - 29.99% 1999 3 minutes 9.5/10
  • Auto loan amounts of up to $150,000
  • Prequalify in minutes without impacting your credit score
  • Refinancing loans save an average of $191 per month
  • 125% financing available for cash-out refis
  • PenFed Credit Union membership required but can be applied for at the same time as your loan
  • See application, terms, and details.


Overall Rating

Interest Rate In Business Since Application Length Reputation Score
5.19% and up 1935 5 minutes 9.5/10

3. RefiJet

  • RefiJet helps people lower their monthly auto payment by an average of $150 a month*
  • Pre-qualifying for a refinance auto loan does not impact your credit score
  • Nationwide network of lenders
  • We present you with options from lenders that fit your situation
  • See application, terms, and details.


Overall Rating

Interest Rate In Business Since Application Length Reputation Score
Varies 2016 5 minutes 9.0/10

Simply click “Our Reviews” to see a quick rundown of each refinancers offerings, as well as some qualifications for applying.

The Cost of Refinancing a Car

Applying for a refinancing loan is a free service, though your lender might charge an origination fee. The amount varies by state, though the usual fee ranges from $50 to $125, or up to 1% of the loan amount. If you prepay the loan in the first year, you might have to pay an early closure fee between $50 and $100.

Your state may also impose a fee for title registration, but these fees pale against the costs involved in having your car repoed or missing out on lower interest rates!

Step 3: Fill Out an Application

Once you’ve selected a reputable auto refinancer, all you have to do is complete the online application form, which can be finished in as soon as two minutes. Here are a few things to have ready in order to complete the application:

  • Personal identifying information such as your address, Social Security number, and previous address if you’ve been at your current address for less than two years
  • Employer and income information, such as a W2 or pay stubs for verification purposes
  • Current auto lender information and account number, as well as details of the vehicle such as the VIN, make, model, mileage, and any other special features/options
  • Co-applicant information, if applicable

All applications are free and quotes are always no-obligation.

Time to Reduce Your Payment And Your Stress

If your car loan is indeed broken, there’s no reason not to fix it by refinancing and securing a longer repayment term and/or lower interest rate. This easy 3-step guide has shown you how refinancing works, how it can save you money, how much it costs, and the best way to find a great refinance provider — even if you have bad credit — to help you feel confident in your decision to refinance. Improve your financial situation and reduce your money stress by applying today!

Advertiser Disclosure is a free online resource that offers valuable content and comparison services to users. To keep this resource 100% free for users, we receive advertising compensation from the financial products listed on this page. Along with key review factors, this compensation may impact how and where products appear on the page (including, for example, the order in which they appear). does not include listings for all financial products.

Our Editorial Review Policy

Our site is committed to publishing independent, accurate content guided by strict editorial guidelines. Before articles and reviews are published on our site, they undergo a thorough review process performed by a team of independent editors and subject-matter experts to ensure the content’s accuracy, timeliness, and impartiality. Our editorial team is separate and independent of our site’s advertisers, and the opinions they express on our site are their own. To read more about our team members and their editorial backgrounds, please visit our site’s About page.