How to Refinance Your Car Online

Refinance your car online to lower your car payments.

Refinancing your car is very similar to refinancing a home. The process is much simpler and quicker, and you could save a lot of money in only a few minutes.

Most people are unaware they’re able to refinance their current car loan and believe it’s too much of a hassle. The truth is, it’s not difficult, and it’s the best way to lower your car payment.

What is a an Auto Refinance Loan?

An auto refinance loan is a loan that will pay off your current auto loan but has a lower interest rate, and the process is more straightforward and much faster.

With companies offering such low-interest rates, auto refinances loans have grown in popularity over the past few years.

If you’ve had bad credit in the past or recently cleaned it up, refinancing your vehicle may be a wise option, even if you’ve been paying on your original loan for a year or two. A drop of just 2% interest points will save you hundreds of dollars over the life of the loan.

Benefits of Refinancing Your Car Loan

  • Lower your current car loan’s monthly payment.
  • Refinancing will lower your current interest rate.
  • Allows access to extra cash for your additional financial responsibilities.
  • Will help you improve your auto loan terms and conditions.
  • Use the lower rate loan to consolidate higher-interest debt.

Why You Should Refinance Your Car

When interest rates drop, many people don’t realize the benefits of refinancing their vehicles. Not only does refinancing your car loan lower your interest rate and monthly payment. It will also save hundreds if not thousands of dollars in interest charges.

Along with lowering your monthly payment, an auto refinance loan can provide you with extra monthly money to spend as you choose. Refinancing car loans has become very popular over the past few years with the way interest rates have been dropping.

To determine if refinancing your current auto loan is right for you. You need to look at your situation. Here are some cases when refinancing your car loan may be right for you.

When to Consider Refinancing Your Vehicle

  • You’re currently paying a high-interest rate on your vehicle.
  • Applying is quick, easy, and can be done online.
  • Your credit history and score have improved since you first financed your current vehicle (or vehicles).
  • You require extra cash quickly or for an emergency.
  • You want to lower your current car loan interest rate and monthly payments.
  • Your expenses have unexpectedly risen, and your income has not.
  • You are renting a home.
  • You would like to take advantage of a financial option with a quick turnaround time to help improve your credit.

Is it Easy to Refinance?

If you have good, average, or even bad credit, the answer is YES!

Online lenders offer several auto refinance loan options for people with all kinds of credit. It only takes a few minutes to submit your information for free.

If you do not get the answer you’re looking for, you can walk away with no obligation.

How Much Can You Save Refinancing Your Car?

One of the most commonly asked questions regarding an auto refinance loan. When figuring out how much you will save when refinancing your current car loan, many factors will come.

Auto refinance loan example.

Suppose you bought a new car and financed an amount of $22,000 for 60 months through the dealership’s finance department. When you purchased the vehicle, you didn’t have any credit, you had bad credit, or the dealer unknowingly signed you at a higher rate than you qualified.

Now you have a great car but a horrible car loan. Don’t feel bad; this situation always happens at car dealerships across the nation. Car dealers are professional actors when it comes to selling cars. You get wrapped up in emotions and pay 18-21% interest or higher when buying the car.

After paying on your car for a few months, you decide to apply for a refinance loan with an online lender. You end up getting approved, and since you’ve made your payments on time, you get approved for a low 8% interest rate.

Interest Rate Calculations on a $22,000 Car Loan
Car Loan PaymentAPR (Interest Rate)Total Interest

Suppose your current dealer rate was 18.95 percent and approved for an APR of 8% through an internet provider. You’ll end up saving $7,440.38 over the life of the loan! You’ll also lower your monthly car loan payment from $570.09 to $446.08. Doing this will give you an extra $124.01 to do with what you wish.

As you can see from the example above, taking a few minutes to apply for an auto refinance loan doesn’t cost you a penny and may save you a few thousand dollars in interest charges over the life of the loan.

Minimum Auto Refinance Loan Requirements

You must fulfill a few basic requirements before applying for an auto refinance loan.

Here are the most common listed below:

  • You must be at least 18 years old.
  • Have a valid driver’s license.
  • Must have proof of full coverage insurance.
  • Be a current U.S. Citizen with a valid Social Security number.
  • A minimum yearly salary of $24,000 a year or a co-signer.

Do You Need a Large Down Payment to Refinance?

Putting money down when refinancing your current car loan is not common.

Every person’s situation is different; some lenders may require a down payment. Once you’re approved, the lender will provide you with any additional information before you sign any documents.

Applying for an auto refinance loan online is free, and there is no obligation. If you are required to put money down, and you don’t have any funds available. You can always “walk away.”

Should I Refinance if I Already Have a Low-Interest Rate?

The short answer is, “yes!”

Refinancing a car loan is not just for people with bad credit trying to get a better interest rate. Having excellent credit, you already understand and know how to manage your money wisely. You may still have savings if you’re paying around 4% APR or more on your current car loan.

It’s free to apply, and the most reputable companies, such as myAutoLoan, do not have any fees if you decide to go with them. If you apply and don’t notice any savings, you’re under no obligation to do anything else; you may walk away.

Suppose you are currently financing $25,000.00, paying 6.95 percent on your existing auto loan, and getting accepted for a 4.95 percent auto refinancing loan. You will save yourself $1,393.93 over the life of the loan!

My advice is to take advantage of a low-interest auto refinance loan. The only thing that can happen is you save some money.

How to Apply for an Auto Refinance Loan

Many people are under the misconception that it’s too difficult or a big hassle to try and refinance their current car loans. This is just one of the many auto refinance myths floating around in the world.

All you need is your computer or mobile device and about 5 minutes of your time to save thousands of dollars possibly. You have a greater chance to save even more in interest charges if you have less than perfect credit.

Car Buying Tip – One of the biggest mistakes people make when applying online for an auto refinance loan is incorrectly inputting the wrong information. Always “double-check” everything you type to ensure you submit the correct information.

Car refinance has been gaining popularity over the past few years. I’ve received several emails asking, “exactly how to apply for an auto refinance loan online?”

So I’ve broken it down step-by-step for you below.

Guide on How to Refinance Your Car Online

  1. Write down your current mileage and the 17-digit vehicle identification number (VIN) of the vehicle you want to refinance.  You will find the VIN in front of the driver where the windshield meets the dash, inside the driver’s door, or your registration.
  2. Get and review your credit scores from a trusted online source like myFreeScoreNow.  You will want to know what’s been reported to your credit bureau before applying for any loan.
  3. Contact the lender of your current car loan and get your payoff amount, account number, and lender’s phone number.
  4. Go to myAutoLoan.  Check the current refinance interest rates their offering.  I advise that if it’s 1%-2% lower than the APR you’re paying now, you should at least apply for a free quote.  The worst thing that can happen is that you save a bunch of money.
  5. Submit your information and the car’s information to each site that can lower your interest rate.  Make sure you enter your name as spelled on your current car loan.  Double-check that you have entered the correct VIN, mileage, and payoff amount.
  6. Your loan may be approved instantly or may take up to 24 hours.  It may take slightly longer on Holidays.
  7. After receiving your approvals, pick the one that benefits you the most.  If none of the approvals provide enough savings to you, no problem, there is no charge or obligation on your part so that you can walk away.
  8. Each state imposes a title transfer fee ranging from $5 to $65, depending on the state where you live.  Your state and not the auto refinance companies we recommend charge this fee.
  9. Once you accept your new refinance loan, you will either have a welcome packet sent to you with a check, or you will be able to download it from your computer automatically.  You must sign the documents and return them with the express mail postage.
  10. Depending on who you decide to refinance with, you must now send the check you received from the refinance company to your current lien holder to pay off your existing loan.  Some of the companies I recommend will even take care of that.
  11. Congratulations, you made a brilliant financial decision by taking the time to refinance your current auto loan!

How to Increase Your Chances of Being Approved for an Auto Refinance Loan

Each lender has its algorithms, so comparing a couple of different companies is essential.

You can do certain things to increase your chances of being approved. The more tips you complete before applying, the better chance you will have of being approved for an auto refinance loan.

Simple tips to increase your chance of approval:

  • Wait until you have at least six months of stable and verifiable employment; the longer employment time, the better. If you don’t have six months with the same employer, providing proof of 1 year in the same industry will also be sufficient.
  • Proof of income. (You may be asked to provide evidence with a computer-generated paycheck stub)
  • Proof of living at the same residence for at least six months. (The more extended residence, the better) It is best not to apply for a loan if you have recently moved in the past six months.
  • Get your credit report and credit score beforehand. Review your bureau, and make sure no mistakes or recent blemishes appear on your credit report (at least within the last six months).
  • Pay down your current credit cards to decrease your debt as much as possible; this will also increase your overall credit score and help you qualify for better interest rates.
  • Close any open lines of credit you may not be using. These stagnate credit lines are lowering your credit score.
  • Do not apply for an auto refinance loan unless your bankruptcy has been discharged. Your chances for approval are slim if you have multiple bankruptcies on your credit report.
  • The car loan you want to refinance is current, and you have other lines of current credit showing on your credit report.
  • Have at least two years of federal tax returns if self-employed.

What is the Minimum Amount Your can Refinance?

Most auto lenders will not approve an auto refinance loan if the payoff is less than $7,500 (varies by lender).

Lenders must make it worth their time and expense to carry the loan if your payoff is less than $7,500. If you need the money or will still save more than if you kept your current loan, you may want to apply for a little more to use towards other financial obligations.

Does it Cost to Refinance My Car?

Reputable auto finance lenders will want to acquire your business for free. They will make money from the auto loan interest rate when refinancing your car loan. If an automobile finance lender requires an upfront fee of any kind just for you to apply with them, avoid them.

Most reputable online lending companies such as myAutoLoan do not charge a fee to apply for an auto refinance loan. You may be subject to some expenses associated with the actual refinancing of your current car loan. Still, they are usually minor compared to the amount of money you can save.

Keep in mind that there is no obligation to proceed after applying. If you dislike the terms and conditions, you can walk away from the process.

How Much Should I Borrow?

I suggest you apply for a more significant amount than needed to finance the remaining balance of your current car loan.

You can use the additional money toward high-interest credit cards or even an extended vehicle warranty. If you’re refinancing your auto loan, you may want to ensure your vehicle is safeguarded until it’s paid off.

May I Apply With a Cosigner?

You can have a cosigner sign with you through most lenders if you have bad credit or don’t earn the minimum monthly income.

A cosigner with good credit may significantly decrease your overall risk to the lender and increase your chances of being approved at a lower annual percentage rate (APR).

About the author
Carlton Wolf is the author and founder of Auto Cheat Sheet.My name is Carlton Wolf, and I’ve been in the car business since 1994, both retail and wholesale. I created the Auto Cheat Sheet to better educate buyers about the deceptive sales practices used by many dealerships throughout the country. Please understand that not all car dealers are dishonest. However, you never know who you’ll be dealing with, though. I’m willing to share my knowledge and experience with anyone who listens. Keep in mind that I’m a car guy, not a writer.