Writer: Matt Walker
Editor: Lillian Guevara-Castro
Reviewer: Ashley Fricker
Key Takeaways
I reviewed auto refinance services for borrowers with bad credit. Your potential savings depend on the new rate, fees, and loan term.
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Auto Credit Express: Best for exploring refinancing with a troubled credit history.
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LendingTree: Best for comparing refinance offers from multiple lenders.
Car owners in the U.S. currently carry more than $1.6 trillion in auto loan debt, and a high interest rate can make an already expensive vehicle cost substantially more. Refinancing replaces your existing loan with a new one and may help you secure a lower APR or monthly payment.
Bad credit can limit your options, but online lending networks let you compare potential offers from multiple lenders using a single request. Just remember that lowering your payment by extending the loan term may increase the total interest you pay.
Best Auto Refinance Loans for Bad Credit Applicants
The services below include lending networks and direct providers that work with a range of credit profiles. Networks may allow several lenders to evaluate one request, but prequalification does not guarantee approval or final loan terms.
- 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.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| 3.99% – 29.99% | 1999 | 3 minutes | 9.5/10 |
Auto Credit Express has long been one of our favorite auto lending networks for bad credit because it partners with a massive group of lenders who each have flexible credit requirements. In fact, more than 1,200 partner lenders have combined to close more than $1 billion in bad credit loans since 1999.
Lenders reside in all 50 states, but you aren’t limited to choosing a lender in your home region. The large network means that all 1,200-plus lenders will compete for your business. That often results in more forgiving approval standards and competitive loan terms.
The network’s application takes approximately three minutes to complete. Shortly after, you’ll receive a status update and potentially multiple loan offers to choose from. The process is quick and painless, which is obvious from the more than 13,000 people who accept financing through the network each month.
To qualify for refinancing through Auto Credit Express, you must:
- Owe less on your car than its current Kelley Blue Book value
- Be current on your loan payments
- Meet the car age and mileage requirements set by each lender
- Have an outstanding auto loan amount that falls within the new lender’s acceptable limits
- Have a better credit score than when you received the initial loan
Most lenders also require at least $1,500 in verifiable monthly income to consider an application.
2. LendingTree
- Auto loans for purchase, refinance, and lease buyouts
- Nationwide lender network
- Get matched with up to 5 lenders that fit your financial profile
- It only takes a few minutes and is free with no obligation
- See application, terms, and details.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 1998 | 4 minutes | 9.5/10 |
LendingTree is a network that can help you match with a direct auto lender in minutes. You can easily view and compare rates and terms to choose the best loan offer for your circumstances.
Filling out its prequalifying form to see the types of loans you may be offered is obligation-free and doesn’t affect your credit score. LendingTree is rated as “Excellent” on Trustpilot by more than 17,000 users of the service.
With refinance terms spanning from one to seven years, you could potentially lower your payment, reduce the APR, or pay off your loan more quickly.
- Loans for new, used, and refinancing
- Queries a national network of lenders
- Bad credit OK
- Get up to 4 offers in minutes
- Receive online loan certificate or check within 24 hours
- See application, terms, and details.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 2003 | 2 minutes | 8.5/10 |
myAutoloan.com is also a lending network that partners with many lenders who specialize in bad credit loans. One single application can result in up to four loan offers within minutes — with no obligation to accept any loan offer you receive.
Once you complete a quick and secure two-minute prequalification form, the network swiftly connects your request with up to four of its partner lenders. If you receive several loan offers, you can carefully compare their terms and conditions to find the one that best suits you.
Once you’ve chosen a loan offer you like, myAutoloan.com will direct you to the lender’s website to complete the remaining paperwork, either online or with a hard copy. After the lender finishes the underwriting process and finalizes your loan, they’ll arrange to pay off your current loan.
From that point, you’ll begin making monthly payments to the new lender.
4. RefiJet
- RefiJet helps people lower their monthly auto payment
- Pre-qualifying for a refinance auto loan does not impact your credit score
- Nationwide network of lenders
- Presents you with options from lenders that fit your situation
- See application, terms, and details.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 2016 | 5 minutes | 8.0/10 |
RefiJet compares your application with programs from multiple lending partners and pairs you with a consultant who helps explain your options and guides you through the paperwork.
RefiJet says customers who refinance specifically to lower their payment save an average of $150 per month, although your actual savings will depend on the rate and term you qualify for. You may also be able to pursue cash-out refinancing or adjust your repayment timeline to better fit your budget.
Another potential perk is going up to three months before making your first payment on the new loan, which can provide some short-term breathing room.
- 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.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| 5.19% and up | 1935 | 5 minutes | 8.5/10 |
PenFed Credit Union says its average customer saves $191 per month when refinancing, but that is usually for people who’ve improved their credit since they took out the loan.
The site offers handy tools to guide you in making smart financial choices about your loan. You can find a prequalification form, loan calculator, and helpful guides on extra services like GAP protection and extended warranty coverage.
How to Refinance a Car with Bad Credit
In the past, getting an auto refinance loan meant dressing up and visiting your local bank or credit union, hoping to make a good impression on the loan officer. But today, you can apply for a loan without even leaving your bed.
You can now compare auto refinance options and complete much of the process online. Here’s how it generally works:
- Check your credit reports and score: Review your free credit reports from Equifax, Experian, and TransUnion for inaccurate information that could affect your application. Your reports don’t include your credit score, but you can check your score for free through several other sources.
- Review your current loan: Find your payoff amount, APR, monthly payment, remaining term, and any prepayment penalty. You’ll need these details to determine whether a new offer would actually save you money.
- Estimate your vehicle’s value: Compare your payoff amount with your car’s current value to calculate its loan-to-value ratio. Refinancing may be harder if you owe more than the vehicle is worth.
- Check your recent payment history: Lenders generally prefer borrowers who are current on their existing auto loans. Recent late or missed payments may make approval more difficult, even if a lender works with bad-credit applicants.
- Prequalify with several lenders or a lending network: Prequalification may let you review potential rates without affecting your credit score, although policies vary. A lending network can send one request to multiple partners, while applying directly limits you to that lender’s options.
- Compare the complete offers: Look beyond the monthly payment and compare the APR, fees, repayment term, total interest, vehicle restrictions, and overall repayment cost. A longer term may lower your payment while increasing the total amount you repay.
- Complete the application: After selecting an offer, provide any required documents and authorize the lender’s credit check. The lender may request proof of income, insurance, registration, identity, and information about your current loan.
- Confirm that your old loan is paid off: The new lender will typically send the payoff amount directly to your existing lender and handle the lien or title transfer. Continue monitoring the old account until it shows a zero balance, and keep making payments until you receive confirmation that the payoff is complete.
- Begin payments on the new loan: Review your first due date and set up payments with the new lender. Keep copies of the payoff confirmation, new loan agreement, and title-transfer documents for your records.
Once the refinance is complete, your old loan should be closed and replaced by the terms of your new agreement. Ideally, the change leaves you with a lower rate, a more manageable payment, or both — but it’s still important to understand the potential benefits and tradeoffs before refinancing.
Advantages of Auto Refinancing
The biggest advantage of refinancing your current auto loan is the chance to lower your monthly payment by choosing a refinance loan with a lower APR than your current one or selecting a longer payoff period. In some cases, you can also decrease the overall cost of your vehicle loan.
Just remember that extending your repayment window can lower your monthly payment, but add several months (or even years) of interest charges that make the overall loan cost greater.
Some lenders provide cash-out refinancing options that let you access your current auto loan’s equity and borrow the full Blue Book value of your car. This means you can use part of the refinance loan to settle your current debt and spend the rest as you wish.
Before you choose a loan and lender — especially one that touts that it can save you money — check for any processing costs or closing fees that can make the loan as expensive (or even more expensive) than your current loan.
Disadvantages of Auto Refinancing
Online lending networks let you reach multiple lenders with just one application. That can boost your approval odds when your credit isn’t great. At the same time, it means each offer may come with different rates, fees, and repayment terms.
Some lenders tack on origination fees that make the loan more expensive than it seems on the surface. Those fees can get tricky, so make sure you know exactly what you’ll have to pay back before you accept a loan.
Depending on your loan’s terms, you might end up paying more in finance charges. While extending your loan’s repayment period can reduce your monthly payment, it might also increase the overall cost of the loan.
For example, here’s how extending a $15,000 loan at 3.5% APR from 36 to 60 months would affect its cost:
| 36-Month Loan | 60-Month Loan | Difference | |
|---|---|---|---|
| Monthly payment | $440 | $273 | $167 less per month |
| Total interest | $823 | $1,373 | $550 more interest |
| Total repaid | $15,823 | $16,373 | $550 more overall |
The tradeoff: Extending the term lowers the monthly payment, but keeping the debt longer increases the total interest paid.
When Should You Refinance Your Car Loan?
Refinancing an auto loan makes sense in many conditions. You should consider applying for a refinance loan if:
- You’ve improved your credit score from when you originally financed the vehicle
- Your current interest rate is above today’s average rates
- You’re unhappy for any reason with your current lender
- You want to lower your monthly payment by reducing your APR or lengthening your repayment period
- You want to borrow money via cash-out refinancing
- You generally owe $7,000 or more on your current loan, but balances vary by lender
Refinancing may not be the right move if you’ve already paid off most of your loan or if your vehicle is older and has high mileage. You can also run into problems if you owe more than the car is worth, which we cover in the next question.
Can I Refinance a Car if I’m Upside Down on My Loan?
It may be possible, but refinancing an upside-down car loan can be more difficult.
Being upside down on your auto loan means you owe more than the car’s current worth. This situation makes refinancing your loan quite challenging because the new lender will rely on the car’s value to determine the loan amount they’re willing to extend.
For example, a lender might agree to provide you with $15,000 for a vehicle valued at $17,000. If you default on the loan, the lender has the right to repossess the vehicle, sell it, and recover some of the losses from your withdrawal from the agreement.
But if the lender extends a $20,000 loan for a $17,000 vehicle — and you default on the deal — then he or she takes, at minimum, a $3,000 loss on the loan.
The best way to obtain refinancing on a loan that you’re upside down on is to make extra payments to your existing lender until your loan-to-value ratio improves and you owe less than the car is worth.
Here’s how a loan balance affects LTV on a $20,000 vehicle:
| Remaining Loan Balance | Loan-to-Value Ratio | Position |
|---|---|---|
| $25,000 | 125% | Upside down |
| $22,500 | 113% | Upside down |
| $20,000 | 100% | Break-even |
| $17,500 | 88% | Positive equity |
| $15,000 | 75% | Positive equity |
| $12,500 | 63% | Positive equity |
| $10,000 | 50% | Positive equity |
Once you’re no longer upside down on your loan, the lenders listed above will be more likely to consider your application for refinancing.
Does Refinancing Hurt Your Credit?
When you refinance your auto loan, the new lender sends money to the previous lender to pay off the debt. The previous lender must report to the credit reporting bureaus that you’ve satisfied that loan, but it can take up to 60 days for it to appear on your credit report.
During this period, your credit file might show you have two active auto loans. This extra debt could lead to a temporary drop in your credit score. But once the old loan is paid off and reflected, your score should bounce back.
Prequalifying for an auto refinance loan often involves a soft credit inquiry that doesn’t affect your credit scores. If you proceed with a formal application, however, the lender will typically perform a hard inquiry.
Hard inquiries can remain on your credit reports for up to two years, although FICO Scores generally consider only inquiries from the previous 12 months. When you’re comparing auto refinance offers, try to submit your applications within a 14- to 45-day period.
Depending on the scoring model, multiple auto loan inquiries made during that rate-shopping window are generally treated as a single inquiry for scoring purposes.
| Credit Check | How Long It Appears | Potential Score Impact |
|---|---|---|
| Soft inquiry | May appear only on reports you view | None |
| Single hard inquiry | Up to two years | May temporarily lower your score |
| Multiple auto loan inquiries within 14–45 days | Each may appear separately for up to two years | Generally treated as one inquiry for scoring |
The inquiries may still appear separately on your credit reports, but shopping within a concentrated period lets you compare lenders without each application necessarily creating a separate scoring impact.
What is the Best Company to Refinance an Auto Loan with?
There isn’t a clear-cut best company to refinance with, as every applicant has different needs.
For example, if you have a very low credit score, you may find Auto Credit Express is your best option. The large network gives Auto Credit Express more opportunities to connect applicants with a lender whose requirements fit their circumstances.
In the end, it’s crucial to choose the loan offering the best rates and terms for you, whether that’s the lowest APR or the easiest monthly payment, no matter which lender provides it.
You’re encouraged to shop around and read reviews like this one. Customer reviews are helpful for understanding a user’s experience and what problems may arise if you work with a certain company. But remember that people are generally more prone to write a negative review than a positive one, so keep that in mind before ruling out an otherwise good lender.
Ranking Methodology
Our list of the top bad credit auto refinance loans evaluates factors like how easily you can refinance with bad credit, the ease of approval for applicants with poor credit, Better Business Bureau ratings, business reputation scores, fees, and Trustpilot customer reviews.
