7 Best Auto Refinance Companies of October 2021

7 Best Auto Refinance Companies of October 2021

The best auto refinance companies offer competitive interest rates and transparent, reliable service. According to RateGenius’ September Auto Refinance Rate Report, the current car refi interest rate is the lowest it’s been all year, with many borrowers saving an average of $100 a month.

Read on to see our top picks of October 2021 and learn how to get the best loan terms that fit your needs.

Our Top Picks for Best Auto Refinance Companies

Best Auto Refinance Company Reviews

LendingTree is a marketplace where you can compare rates for just about any financial product, including auto refinance loans.

We really liked the company’s Auto Refinance Rates comparison tool, which allows you to input your zip code, loan amount, and estimated credit score, and then get examples of potential offers for refis with terms between 36-72 months (with several offers for each term).

LendingTree also features individual reviews for lenders, a refi calculator, and educational resources to help determine whether a refi is the right choice for you.

Finally, it also has its own customer support team, so borrowers can get help regarding any questions they might have about their potential lenders.

Why we chose it: We chose LendingTree as the best marketplace thanks to its variety of tools and resources to help consumers. We particularly liked how easy it was to compare offers quickly without obligation.

rateGenius, another rate comparison site, offers refinancing options that match your existing term length so you don’t pay more over the life of the loan.

If you can get a better rate with one of their lenders, you’ll work directly with rateGenius’ lending specialists to complete your loan application process. The broker attempts to streamline this process, though borrowers with lower credit scores may find that their lender requires more paperwork.

rateGenius also handles back-end work, such as making sure your old loan gets paid off on time and that your new auto loan is set up correctly.

Be mindful that rateGenius is best suited to people who are serious about refinancing rather than looking around for rates, as the broker does require a hard credit pull. If rateGenius considers you ineligible for an offer from their partner lenders, they won’t perform the pull.

Why we chose it: We chose rateGenius as runner-up for best marketplace because of its large network of lenders, handling of back-end work, and acceptance of co-applicants.

Online marketplace Autopay has a large variety of available offers, thanks to a wide lender network of credit unions, banks, and other financial institutions.

Autopay offers various loan options for refinancing your car, including industry rarities such as cash-out refinance loans and lease buyouts. The company also promises to work with borrowers with credit scores as low as 600 to help find them suitable rates.

Moreover, if you’ve improved your credit score since taking out your original loan, Autopay may offer you lower interest rates, lower monthly payments or shorter loan terms.

Note that accessing the lender comparison requires a soft credit check, which won’t affect your score. Once an offer is chosen, then they’ll perform a hard credit pull, which may change the quoted terms if there were any inaccuracies in the income or vehicle data.

Why we chose it: We chose Autopay as best for the largest variety of refinance options because its large network of lenders allows the company to access a wide array of loan options.

Pentagon Federal Credit Union offers some of the lowest auto loan refinance rates on the market, starting at 1.79% for a new car refinance and 2.39% for a used car refinance.

If you’re the vehicle’s original owner and the car is a 2020 model or newer, you could even qualify for a new car refinance loan.

Optional add-ons include Guaranteed Asset Protection (GAP), an extended warranty and debt protection.

• To apply, with PenFed, borrowers must meet one of the following requirements:
• Military service (active-duty or veteran)
• Work at or are a part of its list of employers and organizations
• Live in one of the locations it covers
• Have family that is a PenFed Credit Union member
• Make a $15 donation to Voices for America’s Troops or a $17 donation to the National Military Family Association to qualify for membership

As one of the membership conditions, borrowers must open a savings/share account with a $5 minimum balance and no monthly maintenance fee.

Why we chose it: We chose PenFed as best for low auto refinance rates because not only are they some of the lowest available, the credit union also offers good perks, such as rate discounts and zero prepayment penalties

Auto Credit Express specializes in helping applicants with poor to average credit get better loan rates — including those who owe more than their car is worth.

It does this by connecting you to one of its specialized indirect lenders from what they call “the largest selection of bad credit car dealers across the country” or via its finance department. However, a score of 580 is recommended.

Auto Credit Express also has excellent resources, including in-depth blogs and instructional videos for those looking to learn more about the lending industry.

Why we chose it: We chose Auto Credit Express as best for low credit because it’s one of the few companies that specializes in borrowers with poor credit scores.

MyAutoLoan.com connects borrowers with fair credit with lenders offering competitive rates and a wide variety of auto financing options.

The company’s main focus is low-interest loans, whether you’re buying from a private party, refinancing your car or purchasing a motorcycle.

Before submitting an online application, MyAutoLoan recommends having a minimum income of at least $1,800 per month and a credit score of 575 or higher.

MyAutoLoan.com’s partners don’t offer loans lower than $8,000, and the service will carry out a hard credit inquiry. With that in mind, don’t apply unless you’re serious about refinancing your loan.

Why we chose it: We chose MyAutoLoan.com as best for fair credit thanks to its competitive rates, range of financing choices, all of which are available to borrowers with a minimum credit score of 575.

Lightstreamis an online lender backed by Truist Bank, previously known as SunTrust Bank. It stands out for its low rates and flexible vehicle requirements on auto loans. The lack of car mileage or age restrictions means customers can refinance new, used and even classic cars.

Furthermore, its Loan Experience Guarantee features a $100 reimbursement if you’re not satisfied after finalizing the loan.

Applicants who meet the high credit requirements (good credit to excellent) can also enjoy same-day funding and fixed, low-interest loans.

Why we chose it: We chose Lighstream as best for great credit because of its low rates, lack of vehicle restrictions, and Loan Experience Guarantee — all of which are only available to applicants with good credit.

Other Auto Refinance Companies We Considered

RefiJet

While RefiJet considers a range of credit histories, the company’s requirements considerably limit the type of cars that can be refinanced.

Auto Approve

Auto Approve didn’t make our top picks because it didn’t have any standout features that differentiated the company from its competition.

Lendingclub

Lendingclub did not make the cut due to its high APR rates and limiting requirements for refinancing cars.

Bank of America

While Bank of America offers good starting terms, these are only for qualified applicants.

Capital One

Capital One may require that borrowers pay down the balance of their current car loan if their payoff amount is higher than the company’s limits.

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Refinancing your car loan could allow you to save money on interest, lower your monthly payments, or potentially both.

Get the peace of mind you’re looking for by refinancing your auto loan and freeing up you monthly budget. Click below to get started.

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Auto Refinancing Guide

Refinancing can give access to better interest rates when your credit history has improved since taking out your current auto loan. However, it’s not a decision to be made lightly, as it may mean additional fees and a hit to your credit score. Read on to learn more.

How does refinancing a car work?

There are two main ways to refinance your car.

Traditional auto refinance

Refinancing a car generally means taking out a new loan to pay off the balance on your existing auto loan. Since your original loan is replaced by a new financial obligation, you gain a new APR and new term length.

Cash-out auto refinance

A few lenders also offer cash-out auto refinances, in which your new loan covers your existing balance and provides an additional amount of money. While this may have lower interest rates than other options, such as personal loans or credit cards, your monthly payments will go up. This type of loan also has a higher risk of going upside-down.

Before beginning the process, make sure it’s the right solution for you and whether you meet the qualification requirements. Carefully consider the following:

– Does your existing loan have a prepayment penalty? If so, crunch the numbers to see whether an auto refi makes sense.

– Is your loan balance higher than the car’s market value? First check your car’s value on Kelley Blue Book. If you’re underwater, or owe more than the car is worth, it’ll be very difficult to refinance.

– How old is your car and how much mileage does it have? Auto refinance lenders have restrictions you’ll have to meet. Many won’t offer loans for cars older than 10 years or that have over 120,000 miles.

– Are your loan payments up to date? If you’re behind on payments, many lenders won’t consider you a viable candidate.

– Do you meet the lender’s minimum balance requirements? Each lender has a maximum and a minimum loan amount they’ll refinance. If your loan’s current balance is too low or too high, you may not qualify. Many lenders also have minimum loan amounts (and maximums) to consider.

– Is your car “branded”? Lenders won’t refinance cars that are branded, such as rebuilt, salvaged or commercial vehicles.

Auto refinance and your credit score

Refinance lenders typically conduct a soft pull on your credit for pre-qualification, and then a hard inquiry or hard pull on your credit when you actually apply. The former will have no effect on your score, but the latter will drag you down by a few points.

To minimize the drop, make sure to loan shop within a 14-45 day window, as credit bureaus and the VantageScore and FICO Score systems will count these as one single pull.

Unauthorized hard inquiries aren’t unheard of, so make sure the lender is trustworthy. If you find unauthorized inquiries on your report, here are steps you can take to remove negative items from your credit report.

Your credit score will also drop slightly after finalizing the loan because a refinance counts as new debt. Since this new account is effectively replacing an older debt, the credit drop should be negligible.

In any case, remember to keep making your payments on your current loan until the refinance has gone through. Otherwise, your credit could be affected.

When can you refinance a car loan?

Deciding when you should refinance your loan depends on a number of factors. While a refinance is technically possible even on a new loan, there are some conditions under which it makes the most sense.

• Your current deal isn’t great: If you didn’t do some careful comparison shopping between dealers when you bought your car, your loan may not have the best terms or rates. For instance, if your current APR is around 20-25%, you might be able to get a better offer by shopping around. This is particularly true if your loan is two years older or more, as many loans with high APRs charge most of the interest amount during that time period.
• Your credit score has gone up: An improved credit score will likely give you access to much better terms and lower interest rates.
• Your current loan payments are too high: Whether you’ve lost your job or your budget changed, a refinance can lower your monthly payment by extending the loan’s term length. This does mean you’ll pay more in interest over the long run, but sometimes that may be the least bad choice.

How to refinance a car loan

Once you’ve weighed your options and decided a refi is the way to go, follow these simple steps.

7 steps to apply for an auto refinance

If you have good credit, you’ll likely get a better deal. This may be a good time to find and dispute any incorrect information in your credit report.

Having all your information at hand will help speed the application process.

While it may take some time, thoroughly researching your new lenders and loan offers to find the best auto loan can not only help you compare rates, but also identify any potential red flags. You can also see whether your current lender offers a competitive refinance option.

Getting a pre-approval, when available, presents you as a good candidate for a refinance.

Once you’ve gathered all your documents and have chosen a lender, it’s time to apply.

Carefully read the loan’s fine print and terms. Check whether you can keep your current insurance policy under the new lender’s requirements.

Remember to make sure to keep making your payments until the refinance is finalized.

Documents Needed To Refinance Your Auto Loan

To refinance any kind of loan, some documentation is required. These pertain to personally identifiable information, income, residence and your car’s specifications, among others.

Here’s a detailed list:

☑ Social security number
☑ Employment information
☑ Residence information
☑ Driver’s license
☑ Car registration and mileage information
☑ Proof of insurance

How to refinance a car loan with bad credit

Even if your credit score has gone up, if it’s still under 640, getting the best rates on an auto refinance is unlikely. There may be, however, some cases in which refinancing may be beneficial:

If auto loan rates have gone down – While new-car rates are different from refinance rates, you may have some wiggle room.
If your goal is a lower monthly payment – If your main refi driver is decreasing your monthly payment, this may mean extending your loan term. The downside is that this will extend the life of your debt, and you’ll therefore pay more in interest as well.

If you’re determined to refinance your car loan despite a spotty credit history, follow the steps outlined above. It may make sense to check out competing offers on a marketplace website such as LendingTree or rateGenius. You may also be able to get a better deal with a lender that allows you to add a co-signer to your loan.

How to refinance a car lease

Refinancing a car lease can reduce the high rates on a leasing agreement. Before deciding, however, consider the pros and the cons:

If refinancing isn’t the best option for you, speak with your lender about a lease replacement — swapping out your current lease for one with more favorable terms and rates.

Options for breaking your car lease include:

• Transferring the lease
• Selling your car back to the dealership
• Selling the vehicle to another person

Each of these has associated costs, so evaluate each alternative thoroughly before deciding how to proceed.

How We Chose the Best Auto Refinance Companies

When evaluating the different auto refinance companies in the industry, we considered several criteria. First, we looked for competitive interest rates, zero to no upfront fees, and transparency regarding partners, underwriters and fees.

We also considered each company’s financial stability, their customer complaints with the Consumer Financial Protection Bureau (CFPB) or the Federal Trade Commission (FTC), and their privacy policies.

Summary of Money’s Best Auto Refinance Companies of October 2021