Compare your current car loan to a new rate. See your monthly savings, total interest saved, and whether refinancing makes financial sense.
Refinancing your auto loan means replacing your current loan with a new one — ideally at a lower interest rate. The best time to refinance is when your credit score has improved, when market rates have dropped, or when you originally got a dealer-arranged loan (which often carries inflated rates).
You're "underwater" or have "negative equity" when your loan balance exceeds your car's current market value. Most lenders won't refinance an underwater loan, or will charge a much higher rate. If your balance is higher than your car's value, focus on paying it down before refinancing.
It depends on your current rate vs. the new rate and your remaining balance. Someone refinancing from 9% to 5.5% on an $18,000 balance could save $50-100/month and $2,000+ in total interest.
There's a temporary minor dip from the hard credit inquiry. However, long-term on-time payments on the new loan help your score recover quickly.
Lenders tier their rates in credit score bands. Moving from 620 to 680 can drop your rate by 2–3 percentage points. Moving from 680 to 720+ can shave off another 1–2 points. If your score has improved since you got your original loan, it's worth checking rates even if the improvement seems small.
Probably not. Refinancing makes the most sense when you have 2+ years left on your loan. If you're in the final year, the interest savings are minimal and the hard credit inquiry isn't worth it.
Credit unions typically offer the lowest auto refinance rates. Online lenders like LightStream and PenFed are also competitive. Avoid going back to the dealership — dealer-arranged financing almost always carries inflated rates. Get quotes from at least 2–3 lenders before deciding.