Your rate depends on your credit score, loan term, vehicle age, and which lender you choose

The best auto refinance rate for you is not a single number—it changes based on your credit profile, how long you want to borrow, and what lenders are willing to offer you right now. A borrower with a 750 credit score will see rates 2 to 3 percentage points lower than someone with a 620 score at the same lender. The vehicle's age, mileage, and remaining loan balance also matter. Lenders typically won't refinance cars older than 10 to 12 years or with more than 150,000 miles, though some will go higher.

The only way to know what rate you can actually get is to request quotes from multiple lenders. Banks, credit unions, online lenders, and your current auto lender all set rates differently. Comparing at least three to five offers takes 15 to 30 minutes and can save you hundreds of dollars over the life of the loan.

Key Takeaways

  • Your credit score is the single biggest factor in your rate—a 50-point increase can lower your rate by 0.5 to 1 percentage point.
  • Shorter loan terms (36 to 48 months) typically carry lower rates than longer ones (60 to 72 months), though your monthly payment will be higher.
  • You must request quotes from at least three lenders to see the real range of rates available to you, and rate quotes are free with no obligation.
  • Your current lender, credit unions, and online lenders often compete on rate, so checking all three categories gives you the most options.
  • Refinancing makes sense only if your new rate is at least 0.5 to 1 percentage point lower than your current rate and you plan to keep the car long enough to recoup closing costs.

How credit score affects your rate

Lenders use your credit score as the primary measure of risk. A higher score signals that you have paid past debts on time, so lenders offer lower rates. The difference is substantial: a borrower with a 750 score might receive a 4.5% rate, while a borrower with a 650 score at the same lender might see 7.2% or higher.

Credit score ranges vary slightly by lender, but most use these tiers: excellent (740+), good (670–739), fair (580–669), and poor (below 580). If your score is below 620, many mainstream lenders will decline to refinance. If you are in that range, credit unions and some online lenders may still work with you, but rates will be higher.

Before you request quotes, check your credit report for errors at annualcreditreport.com (the only free, federally authorized site). Dispute any mistakes—they can lower your score and cost you money in interest. If your score is lower than you expected, waiting three to six months while paying bills on time can raise it enough to may have access to for better rates.

Loan term and monthly payment trade-offs

A shorter loan term (36 to 48 months) almost always carries a lower interest rate than a longer one (60 to 72 months). The tradeoff is your monthly payment: a $20,000 loan at 5% costs $460 per month over 48 months but only $370 per month over 60 months. The longer loan costs you roughly $2,200 more in total interest.

When you refinance, you can choose a new term. Some people refinance into a shorter term to pay off the loan faster and save on interest. Others refinance into a longer term to lower their monthly payment, even if the rate stays similar. Both are valid strategies depending on your cash flow and goals.

Before you lock in a term, calculate the total interest you will pay. Most lenders' websites have a loan calculator where you can enter the loan amount, rate, and term to see the total cost. Comparing a 48-month and 60-month option side by side shows you exactly how much extra interest the longer term costs.

Vehicle age and mileage limits

Lenders set age and mileage cutoffs because older, higher-mileage vehicles are riskier—they are more likely to break down, leaving you unable to pay. Most lenders will refinance vehicles up to 10 years old with up to 120,000 miles. Some go to 12 years and 150,000 miles. A few credit unions and online lenders will go further, but those are exceptions.

If your vehicle is close to or past these limits, call lenders directly before requesting a formal quote. A quick phone call can tell you whether they will even consider your car. If your vehicle is too old for mainstream lenders, credit unions are often your best option—they tend to have more flexible policies and may offer better rates to members.

Where to request rate quotes

You have three main categories of lenders to check: your current auto lender, banks and credit unions, and online lenders. Each sets rates independently, so you may see a 1 to 2 percentage point spread between the lowest and highest offer.

Your current lender: Call or log into your account and ask about refinancing. They already have your information and may offer a competitive rate to keep your business. Some waive or reduce closing costs for existing customers.

Banks and credit unions: Local and regional banks often compete on auto refinance rates. Credit unions typically offer lower rates to members, so if you belong to one, start there. You can search for credit unions in your area at co-opsharedbranch.org or ask whether your employer, school, or professional association offers membership.

Online lenders: Companies like LendingClub, Upgrade, and others operate entirely online and often have streamlined approval processes. They may offer competitive rates and faster funding. Read reviews on independent sites like Trustpilot or the Better Business Bureau before explore.

Request quotes from at least three lenders—one from each category if possible. Rate quotes are free and do not affect your credit score (they use a "soft pull" that does not show up on your report). You have 14 to 45 days to shop around without multiple hard inquiries hurting your score, depending on the credit bureau.

Comparing offers and calculating your savings

When you receive quotes, compare the interest rate, loan term, monthly payment, total interest paid, and closing costs. A lower rate is not always the best deal if closing costs are high or the term is longer than you want.

Use this formula to decide whether refinancing makes sense: (New closing costs) ÷ (Current monthly payment − New monthly payment) = months to break even. If you plan to keep the car longer than that, refinancing saves you money. For example, if closing costs are $300 and your payment drops from $400 to $350, you break even in 6 months. If you plan to keep the car for at least two more years, refinancing is worth it.

Also check whether your current loan has a prepayment penalty. Some lenders charge a fee if you pay off the loan early. If yours does, factor that into your break-even calculation. Most modern auto loans do not have prepayment penalties, but older loans sometimes do.

Red flags and what to avoid

Be cautious of lenders who may provide a rate before you formally explore, promise rates that seem too good to be true, or pressure you to decide quickly. Legitimate lenders always require a formal process and a hard credit pull before quoting a final rate. They also give you time to review the offer.

Avoid refinancing if your current loan is very new (less than six months old). You will have paid mostly interest in those early months, so refinancing does not save much. Also avoid refinancing if you are underwater on the loan—meaning you owe more than the car is worth. Most lenders will not refinance in that situation, and those who do charge much higher rates.

Do not explore with every lender you find. Multiple hard inquiries in a short time can lower your credit score by a few points. Stick to three to five applications within a 14-day window, which credit bureaus treat as a single shopping inquiry.

Frequently Asked Questions

How long does it take to refinance an auto loan?

From process to funding typically takes 3 to 10 business days. Some online lenders fund in 24 to 48 hours. Your current lender will be paid off first, and then the new lender funds the remainder to you or directly to your old lender. You will receive new loan documents and a new payment schedule.

Will refinancing hurt my credit score?

A hard credit inquiry will lower your score by a few points temporarily. Multiple inquiries within 14 days count as one inquiry, so shopping around does not compound the damage. Your score typically recovers within 3 to 6 months as you make on-time payments with the new lender.

Can I refinance if I have bad credit?

Yes, but your options are limited and rates will be higher. Credit unions are often more flexible than banks. Some online lenders work with borrowers in the 580 to 620 range. You may also consider waiting a few months to improve your score, which can lower your rate significantly.

What if my car is worth less than I owe?

Most lenders will not refinance if you are underwater. Some credit unions and specialized lenders will, but they charge higher rates to offset the risk. Your best option is to wait until you have paid down the loan enough to owe less than the car's value, then refinance.

Do I need to switch insurance when I refinance?

No. Your insurance policy is separate from your loan. However, your new lender will require proof of full coverage (collision and comprehensive) before funding. Contact your insurance company to confirm your policy meets those requirements, but you do not need to switch providers.