Best Auto Refinance Loans

OpenRoad Lending offers affordable rates and an easy online application process

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Refinancing your auto loan can help you lower your interest rate, reduce your monthly payment, and reduce the total amount of interest you pay on your car loan. Whether you're looking to free up cash flow or pay off your loan faster, an auto refinance can be a good option, especially in the current low-rate environment.

The best auto refinance loans feature competitive rates and low minimum loan amounts. They also have flexible credit score requirements and repayment terms. You should look for a lender with a history of high customer satisfaction and an easy application process.

Best Auto Refinance Loans of 2021

Best Refinance Rates : OpenRoad Lending


OpenRoad Lending

OpenRoad Lending

  • Starting interest rate: Not stated
  • Minimum credit score: Not stated
  • Loan terms (range): Up to 72 months
Why We Chose It

OpenRoad Lending offers auto refinance loans with extremely low rates. While they don’t disclose their starting interest rates online, qualified borrowers can expect to receive quotes for competitive rates.

Pros & Cons
Pros
  • Low rates

  • No application fees

  • Specializes in auto refinancing

  • Online application

Cons
  • Minimum refinance amount of $7,500

  • Refinance restrictions on vehicle mileage, age, and brand

Overview

OpenRoad Lending specializes in auto refinancing, offering traditional and cash-back refinancing options and a wide range of loan terms. Borrowers with excellent credit can refinance into some of the lowest rates available. In addition, it provides financing options for individuals across the credit spectrum.

Key Information

  • APR: Said to be very low, apply to see them
  • Minimum loan amount: $7,500 in most states
  • Repayment terms: Up to 72 months
  • Recommended credit score: Not disclosed 
  • Availability: Nationwide

Founded in 2009, OpenRoad Lending specializes in auto refinance loans and offers a range of car-related financial products. Rates for refinancing are said to be very low, but you must apply to see them. OpenRoad Lending says that its customers tend to save $100 per month or more with their new lower payments.

Its traditional refinance product is open to borrowers of all credit ratings. There's also a cash-back refinancing option, which allows borrowers to get cash out by refinancing their vehicle.

In order to refinance with OpenRoad Lending, you must be financing a minimum of $7,500 and a maximum of $100,000 for a vehicle that is eight model years old or newer. The vehicle must also have less than 140,000 miles. Borrowers need a gross monthly income of at least $1,500 and can’t be self-employed. OpenRoad won’t refinance vehicles that are no longer being manufactured, commercial vehicles, recreational vehicles, or motorcycles. 

You can apply for a loan through OpenRoad Lending via its online application or over the phone.

Best Bank for Auto Refinance : Bank of America


Bank of America

Bank of America

  • Starting interest rate: 3.29%
  • Minimum credit score: Not stated
  • Loan terms (range): 48 to 72 months
Why We Chose It

If you’re looking to refinance your auto loan at a big bank, Bank of America is a good option. The lender features multiple refinance options and an easy online application process.

Pros & Cons
Pros
  • Competitive rates

  • Online application

  • Transparent rates and terms online

  • Established financial institution

Cons
  • Minimum finance amount of $7,500

  • Must have fewer than 125,000 miles

  • Car can't be valued at less than $6,000

Overview

Among big banks, Bank of America offers competitive refinance rates and an easy overall process. It's open to borrowers throughout the nation and scored exactly the average in J.D. Power's 2020 U.S. Consumer Financing Satisfaction Survey.

Key Information

  • APR range: As low as 3.29% APR
  • Minimum loan amount: $7,500 for purchase ($8,000 in Minnesota)
  • Repayment terms: 48 to 72 months
  • Recommended credit score: Not disclosed 
  • Availability: All 50 states

Bank of America (BofA) offers a number of car loan refinance options. Borrowers can refinance any existing auto loan, whether the original loan is through BofA or another institution. Its rates for refinances start at 3.29%. Preferred Rewards customers of the bank can get up to a 0.5% discount on their rate.

The main disadvantage to getting an auto loan through Bank of America is its restrictions on which vehicles it will finance. It won't provide loans for vehicles over 10 years old, for vehicles with 125,000 miles or more, or for vehicles worth less than $6,000. It also won't provide a loan amount of less than $7,500 ($8,000 in Minnesota).

Those interested in refinancing through BofA can start the application process online. Bank of America says the application takes about 60 seconds. Once approved, payment is sent directly to the loan holder. Its online application allows for 48-, 60-, and 72-month terms, but it has more options if you apply in a branch or over the phone.

Best Credit Union for Auto Refinance : PenFed Credit Union


PenFed Credit Union

PenFed Credit Union

  • Starting interest rate: 1.79%
  • Minimum credit score: Not stated
  • Loan terms (range): 36 to 84 months
Why We Chose It

PenFed Credit Union is our top choice for auto loan refinancing from a credit union. The lender features widespread availability and competitive rates.

Pros & Cons
Pros
  • Offers a wide range of options

  • Competitive rates

  • Loan amounts from $500 to $100,000

  • Online application

  • Borrow up to 100% of the vehicle's value

Cons
  • High minimum loan amount for longer terms

  • Excellent credit history required for lowest rates

  • Membership in the credit union is required

Overview

Members of PenFed get access to very competitive refinance rates with an average monthly savings of $108 per month. There's a convenient online application for refinances, and borrowers can finance up to 100% of their vehicle.

Key Information

  • APR range: As low as 1.79% APR
  • Minimum loan amount: $500
  • Repayment terms: 36 to 84 months
  • Recommended credit score: Not disclosed 
  • Availability: All 50 states

For members of the credit union, PenFed provides a wide range of loan terms and very competitive rates. Refinance rates for 2020 or newer model years start as low as 1.79% for a 36-month loan for loan amounts ranging from $500 to $100,000.

Rates and minimum loan amounts at PenFed increase as the refinancing term increases. For example, an 84-month refinance loan with a model year of 2020 or newer comes with a rate starting at 4.49%, up from 1.79% on a 36-month loan. As with most lenders, borrowers need excellent credit in order to get the lowest rates.

Keep in mind that membership in the credit union is required in order to refinance an auto loan. You also need to open a savings/share account with at least $5.

Best Online Refinance Loan : LightStream


LightStream

LightStream

  • Starting interest rate: 2.49%
  • Minimum credit score: Not stated
  • Loan terms (range): 24 to 84 months
Why We Chose It

If you’re looking to apply to refinance an auto loan online, LightStream is a great option. With low rates that reward borrowers with good credit, LightStream also features a fast online application and same-day funding.

Pros & Cons
Pros
  • Completely online process

  • 0.5% discount with auto pay

  • Same-day funding

  • No restrictions on make, model, or mileage

Cons
  • Online application only

Overview

LightStream offers competitive rates, a wide range of refinance options, and an entirely online process for refinancing. It also gets strong customer service ratings, receiving a top score in the J.D. Power 2020 Customer Lending Satisfaction Study.

Key Information

  • APR range: As low as 2.49% with autopay (Rates as of 03/11/2021)
  • Minimum loan amount: $5,000
  • Repayment terms: 24 to 84 months
  • Recommended credit score: Not disclosed 
  • Availability: All 50 states

LightStream, the online lending arm of SunTrust Bank, offers a completely online lending process. Borrowers can receive a direct deposit as soon as the same day. For those with excellent credit, LightStream offers some of the most competitive refinance rates available with a wide range of loan terms. There are also no major restrictions on the type of vehicle you can refinance.

Rates from LightStream start as low as 2.49% on 24- to 36-month loans of $10,000 to $24,999. That’s with its autopay option. If you don’t opt for autopay, LighStream’s quoted rates increase by 0.50% points. You can finance loan amounts as low as $5,000 or as high as $100,000. Loans can’t be used to finance an existing LightStream loan. 

Keep in mind that LightStream may do a "hard pull" on your credit right away when applying. Some lenders will let you see rates and details with just a soft pull. However, if you want a loan you can't escape getting a hard pull so it's not a big difference.

Final Verdict

There are lots of options when it comes to auto refinance loans. Whether you’re looking to lock in a lower monthly premium or just pay off your loan faster, an auto loan refinance can help you to qualify for more competitive terms than your original loan. Overall, our top pick for an auto refinance loan is OpenRoad Lending.

OpenRoad Lending features competitive rates for borrowers with excellent credit. However, the lender also offers auto refinance loans even to borrowers with less than stellar credit. OpenRoad Lending specializes in auto loan refinancing, and features an easy online application with no application fees.

Compare The Best Auto Refinance Loans

Company Starting Interest Rate Minimum Credit Score  Loan Terms (range)  Maximum Loan Amount 
OpenRoad Lending
Best Refinance Rates
Not stated Not stated Up to 72 months $100,000
Bank of America
Best Bank for Auto Refinance 
3.29% Not stated  48 to 72 months $150,000 
PenFed Credit Union
Best Credit Union for Auto Refinance
1.79% Not stated  36 to 84 months  $100,000 
LightStream
Best Online Refinance Loan 
2.49% Not stated  24 to 84 months $100,000 

Guide to Choosing the Best Auto Refinance Loan

When to Consider Refinancing Your Auto Loan

While an auto loan refinance can save you money, it’s not the right fit for everybody. You should assess your needs to decide if it’s a good time to refinance your auto loan before you apply. For example, if your credit score has improved or interest rates have dropped, you may be able to secure more favorable terms than your original plan. If you’re having trouble making your monthly payments, refinancing your auto loan can also be an opportunity to lower premiums to meet your budget.

If your credit score is lower than it was when you initially applied, or if interest rates are much higher, it usually doesn’t make sense to apply for an auto loan refinance. You should only go through with an auto loan refinance if the rates and terms are better than those of your original loan.

Compare Auto Refinance Loans 

Before applying for an auto refinance loan, you should be sure to compare quotes from multiple different providers. Some factors to take into consideration include:

  • Loan amounts: Most lenders have minimum and maximum loan amount requirements, usually somewhere between $7,000 and $100,000. Make sure that the loan you want to refinance is in between these limits.
  • Rates: One of the main goals of refinancing an auto loan is to lock in lower rates. Make sure to compare rates from multiple different providers to ensure you’re getting the best possible deal.
  • Repayment terms: Whether you want to pay off your loan faster, or need a longer term length with smaller monthly premiums, look for an auto refinance loan with repayment terms that meet your needs.
  • Credit score requirements: Some lenders have minimum credit score requirements for borrowers. If your credit score isn’t where you want it to be, consider holding off on applying until you raise your score.
  • Car requirements: Not all lenders will issue auto refinance loans for all cars. Make sure that your car meets the requirements for any lenders that you’re interested in.

Apply for Your Auto Refinance Loan

There are a few steps you’ll need to take in order to apply for an auto refinance loan. Once you’ve decided on a lender, you’ll need to gather all of the required documents before applying. This can include information about yourself, like your name, address, and social security number, as well as information about your vehicle and your previous loan.

If you’re interested in applying for an auto refinance loan, it’s a good idea to wait to apply until your finances are in order. For example, if your credit score is near a threshold, you might want to take steps to raise your score before applying in order to qualify for lower rates. Once your application is accepted, you’ll need to begin repaying your new loan. It’s a good idea to set up automatic payments each month to make sure you never miss a payment.

Frequently Asked Questions

Can You Refinance a Car Loan? 

If you aren't happy with your current car loan, you can refinance into a loan with a different interest rate and new terms.

Refinancing a car loan means taking out a new loan that replaces your existing loan. It's a brand-new loan that you often get from a different lender. Depending on the new lender's requirements, you might be able to keep the length of the loan the same, shorten it, or extend it.

When you refinance, your new loan amount will generally be the balance you have left on your current loan. However, some lenders allow for a cash-out refinance. Just keep in mind that taking out cash on a car with limited equity could cause you to owe more on the vehicle than it's worth.

Should You Refinance Your Car?

Whether you should refinance your car loan depends on your situation.

Here's when it's beneficial to refinance your auto loan:

  • If interest rates have dropped. Refinancing into a lower rate can reduce the overall interest costs on your loan.
  • If you want to lower your monthly payments. Getting a new loan can help you free up cash for bills and other costs.
  • Your credit has improved since you purchased the vehicle. If your credit score has jumped up since you first purchased your vehicle, you might be able to get a better loan.

Here's when it's not beneficial to refinance your auto loan:

  • If you're going into negative equity. You don't want to owe more on the car than it's worth. If refinancing will put you upside-down on your car loan, consider other options.
  • Extending the loan term. Lengthening the term of your car loan typically will cause you to pay more interest over the life of the loan and more for your car. Though longer terms can lower your monthly payment, long-term loans are generally more expensive.

Refinancing your auto loan can help you decrease your payments and the amount of interest you pay over the life of the loan. But whether you should refinance depends on your situation. If you decide that refinancing is the right move for you, seek out a lender and loan terms that meet your needs and help improve your overall financial picture.

When Should You Refinance a Car?

When to refinance depends on your circumstances and needs. Refinancing could make sense if your credit score has recently improved, if car loan rates have fallen, or if you need a lower monthly payment. 

Overall, consider refinancing when you can get a better deal on your car loan and it won't cause you to pay more for the vehicle.

How Can You Refinance an Auto Loan?

Each lender has its own process and requirements for refinancing auto loans. However, the steps to refinance are generally similar to taking out an initial car loan. Here’s what the refinance process looks like:

  1. Check your credit report. Fixing any errors on your credit report may help raise your credit score. Lenders largely determine the rate you receive based on your credit, so any improvements to your credit will lead to lower rates and bigger savings on your loan in the long run.
  2. Gather documents and information about your existing loan and your current vehicle.
  3. Shop refinance loans at multiple lenders and get preapproved. Include online lenders, big banks, credit unions, and community banks in your search. Any lender with competitive rates and fees is worth consideration. Remember, credit inquiries within a 14- to 45-day period count as a single inquiry on your credit report.
  4. Decide on a lender. Sign your new contract and send any supporting documents needed, including proof of income.

Can You Refinance Your Auto Loan With Your Existing Lender?

The rules for refinancing an existing loan with the same lender vary by financial institution. PenFed Credit Union, for example, does not allow refinancing for cars already financed with the credit union. Other lenders do allow borrowers to refinance an existing loan.

Keep in mind that it may not always be beneficial to refinance with the same lender. You might find a better deal by refinancing with another institution.

Can You Refinance a Car Loan With Bad Credit?

Yes, several lenders offer auto loan refinance options for borrowers with bad credit. Some lenders don't even have a credit requirement in order to get a loan.

When applying for these loans, watch out for high interest rates. Many loans for borrowers with poor credit come with high annual percentage rates that can add significantly to the cost of the loan.

Methodology

To choose the lenders featured on this list, we evaluated loan offerings from 15 different auto refinance lenders using several criteria. First, we looked at auto loan rates and loan options available to borrowers. We also considered loan amount ranges, loan types offered, availability, repayment term options, and credit score requirements. We also reviewed customer service satisfaction.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. J.D. Power. "Dealership-Based Auto Finance Faces Permanent Challenge as Digital and Direct Financing Options Increase during Pandemic, J.D. Power Finds." Accessed Mar. 11, 2021.

  2. J.D. Power. "Consumer Lending Satisfaction Hinges on Trust, Ease of Access Now More Than Ever Before, J.D. Power Finds." Accessed Mar. 11, 2021.