Where to refinance your car loan

You can refinance a car loan through your current bank, a different bank, a credit union, or an online lender. Each type of lender has different requirements, interest rates, and approval timelines. Your current bank may offer you the fastest process since they already have your financial history, but shopping around usually finds you a better rate — sometimes significantly better.

The lender you choose depends on your credit score, how much you still owe, and what kind of terms matter most to you. A bank with a local branch might offer in-person support; a credit union might offer lower rates to members; an online lender might approve you in hours. Most people who refinance check at least three lenders before deciding.

Key Takeaways

  • Traditional banks, credit unions, and online lenders all refinance car loans, and rates vary enough that checking three to five lenders can save you hundreds of dollars over the loan term.
  • Your current bank can refinance your existing loan with them, but they are not required to offer you their best rate — shopping elsewhere often reveals better terms.
  • Credit unions typically offer lower rates than banks to their members, but you must be a member to refinance with them.
  • Online lenders can approve you in one to three business days, but you will still need to work with your current lender to pay off the old loan and transfer the title.
  • Your credit score, the age of your car, and how much you still owe all affect which lenders will work with you and what rate they offer.

Traditional banks and their refinancing process

Banks like Chase, Bank of America, Wells Fargo, and regional banks in your area all refinance car loans. You can start by calling your current bank's auto loan department or visiting a branch. If you bank somewhere else, you can still explore — they will pull your credit report and review your income and the car's value.

Banks typically take three to seven business days to approve a refinance. They will ask for your current loan documents, proof of income (usually a recent pay stub), and proof of insurance. Once approved, the new bank pays off your old loan and issues you a new one with new terms. You keep driving the same car; only the lender and the monthly payment change.

Banks generally require a minimum credit score between 620 and 680, though better rates go to borrowers with scores above 700. They also want to see that you have been making your current payments on time. If your car is very old (usually more than 10 years) or has very high mileage (over 150,000 miles), some banks will decline to refinance it.

Credit unions and member-only rates

Credit unions often offer lower interest rates than banks, sometimes by one to two percentage points. Lenders like Navy Federal Credit Union, Pentagon Federal Credit Union, and local credit unions in your area refinance car loans for their members. The catch: you must be a member to refinance with them.

Membership requirements vary. Some credit unions are open to anyone who lives or works in a certain area. Others require you to work for a specific employer, belong to a specific organization, or have a family member who is already a member. A few allow you to join by making a small donation to a nonprofit they sponsor. Check the credit union's website or call to learn what membership looks like for you.

Once you are a member, the refinancing process is similar to a bank: you provide loan documents, proof of income, and proof of insurance. Credit unions typically take five to ten business days to approve. Because they are nonprofit, they often have more flexibility on credit scores and car age than banks do, though this varies by union.

Online lenders and fast approval timelines

Online lenders like LendingClub, Upgrade, and SoFi refinance car loans and can give you a decision in as little as one business day. You fill out an process on their website, and they pull your credit report and verify your income electronically. Some will give you a rate quote without a hard credit pull, so you can compare offers before committing.

Online lenders work best if you have a credit score above 650 and a car that is less than 10 years old. They typically require that you still owe at least $5,000 on the loan — they are less interested in small refinances. Approval is fast, but funding still takes a few business days because the lender has to coordinate with your current lender to pay off the old loan.

One thing to watch: online lenders cannot directly pay off your current loan in all states. In some places, you receive the funds and are responsible for paying off the old lender yourself. Ask the lender upfront whether they handle the payoff directly or whether you will need to manage it. If you manage it yourself, make sure you have the funds before you close the new loan, or you could end up owing two lenders at once.

Comparing rates across lenders

Interest rates for car refinancing vary based on your credit score, the age of your car, how much you owe, and the loan term you choose. A borrower with a 750 credit score might get 4.5 percent from one lender and 5.2 percent from another. That difference costs real money: on a $20,000 loan over five years, the difference between 4.5 percent and 5.2 percent is roughly $700 in total interest.

Most lenders offer a rate quote without a hard credit pull, which means you can check five to ten lenders in a day without damaging your credit score. A hard pull (the kind that does affect your score) only happens when you formally explore. Soft quotes let you compare offers before you decide which lender to actually explore with.

When you compare, look at the interest rate, the loan term (how many months you have to pay), and any fees. Some lenders charge an origination fee (usually 0 to 1 percent of the loan amount) or a prepayment penalty if you pay off the loan early. Others charge nothing. Read the fine print before you commit.

What lenders need from you

Every lender will ask for the same basic information: your name, address, Social Security number, current loan details (the lender's name and your account number), proof of income, and proof of insurance. Have these ready before you explore.

Proof of income is usually a recent pay stub (within the last 30 days) or a tax return if you are self-employed. Proof of insurance is your current auto insurance card or declaration page. Your current loan documents should be in your email or your lender's online portal — if you cannot find them, call your current lender and ask them to email you a statement showing the loan balance and payoff amount.

Some lenders will also ask for the vehicle identification number (VIN), which is on your registration and on the dashboard of your car. They use this to verify the car's age, mileage, and value. If the car is worth significantly less than what you owe, some lenders will decline to refinance.

Timing and what happens after approval

From process to funding usually takes five to ten business days with a bank or credit union, and one to five business days with an online lender. The timeline depends on how quickly you provide documents and how busy the lender is.

Once you are approved, the new lender pays off your old loan. Your old lender sends the title to the new lender (or to you, depending on your state). You receive new loan documents and a new payment schedule. Your first payment to the new lender is usually due 30 to 45 days after funding. During that gap, make sure you do not miss a payment to your old lender — keep paying until you receive confirmation that the loan has been paid off.

After the refinance closes, you own the car the same way you did before. The only thing that changes is who you send the payment to each month and what that payment amount is.

Frequently Asked Questions

Can I refinance with my current bank?

Yes, but your current bank is not required to give you their best rate. They know you are less likely to shop around, so they may offer terms that are not as good as what you would get elsewhere. It is worth asking what rate they can offer, but also check at least two other lenders before deciding.

What if my credit score is below 620?

Most banks and online lenders will decline you. Credit unions are sometimes more flexible, especially if you have been a member for a while. You can also wait three to six months, make on-time payments to your current loan, and try again — your score will improve and your options will expand.

Do I have to refinance with a lender in my state?

No. Banks and online lenders operate across state lines. Credit unions are sometimes limited by membership rules, but many large credit unions serve members nationwide. You can refinance with a lender anywhere in the country.

What happens to my old loan documents after refinancing?

Your old lender closes the account and sends you a final statement showing a zero balance. Keep this for your records. The title to your car transfers to the new lender (or to you, depending on your state's rules). You do not need to do anything — the lenders handle the paperwork.

Can I refinance if I am upside down on my loan?

It depends. If you owe more than the car is worth, most banks and online lenders will decline. Some credit unions will refinance an upside-down loan if you have been a member for a while and have a good payment history. Call a few credit unions in your area and ask — it is worth exploring if you are stuck.