If you’re looking to save money on monthly car expenses, refinancing your current auto loan could be a good option. Refinancing an existing loan can often lower your monthly payment by either reducing your interest rate or extending the life of the loan. With the vast plethora of financing options available to consumers today, from traditional banks and credit unions to online lending platforms, it can be challenging to find the one that’s right for you. One aspect you’ll want to consider is the loan’s annual percentage rate (APR). Let’s examine some of the best auto refinance rates currently available as of August 2022.
What Is an Auto Refinance?
Anytime you refinance a loan, it means that you are taking out a new loan to replace the current loan. Refinancing can be done for a variety of reasons, such as:
- You improved your credit score. If you’ve improved your credit score by paying bills on time or reducing your total debts, you may want to consider refinancing your auto loan.
- You increased your income. Whether you changed jobs or received a promotion, you may qualify for lower interest rates if your income has increased.
- Your interest rates have dropped. Interest rates vary based on the economy, and they can go up and down significantly. If you see the interest rates drop, it could be time to refinance.
- You owe less than your vehicle’s value. With a lower loan-to-value (LTV) ratio, you may be able to get a lower interest rate.
On the other hand, you shouldn’t refinance your current auto loan if one of these scenarios applies to your situation:
- Your existing loan includes prepayment penalties. If the prepayment penalty is more than the savings you’ll enjoy from refinancing, you may want to stick with your current loan.
- You owe more than your vehicle’s value. If your loan is upside down, it’s more challenging to qualify for refinancing. If you do qualify, it’s likely at a higher interest rate.
Everyone’s situation is different, and refinancing is a personal decision. Even if you end up paying a prepayment penalty or more overall for your vehicle, you might need to decrease your monthly premium to afford your payments. Losing your vehicle to repossession due to nonpayment can become its own financial burden, such as if you have no other transportation to work, so you may have to refinance even if doing so doesn’t save you money in the long run.
Best Auto Refinance Rates
If you decide that it’s worth it to refinance your current auto loan, it’s time to start shopping around for a lender. You’ll want to do your research and compare rates, loan terms, and online reviews of each company before selecting a financial institution to refinance your auto loan.
Lenders determine the loan terms and APR they offer you based on a variety of factors, including your:
- Credit score
- Vehicle value
- Vehicle age
- Vehicle mileage
- Loan term
You can visit an auto refinance company’s website to view their rates, terms, and loan limits. Often, the rates will be listed ranging from those for borrowers with bad credit to excellent credit. The better your credit score, the lower the interest rate you’ll receive.
According to MarketWatch, here are the best auto refinance rates available as of August 2022:
As a part of Horizon Digital Finance LLC, myAutoloan is an online marketplace for refinancing options that was founded in 2003. You can get $2,500 to $100,000 for 24 to 84 months from myAutoloan as long as you have a minimum credit score of 600. Interest rates start at 1.99%, with no payment due for the first 90 days for qualified borrowers. myAutoloan also offers three refinancing options:
- Traditional: You will replace your current loan with another loan.
- Lease payoff: If you plan to purchase your vehicle at the end of your lease, a lease payoff loan may help you avoid fees such as mileage charges.
- Cash-back: When the LTV of your vehicle leaves you with equity available in your vehicle, you can refinance and take cash out on top of redoing the loan, leaving you with money for repairs, vacations, or anything else you need.
Trustpilot gives myAutoloan 4.3 out of 5 stars over 816 reviews. You can get up to four offers for refinancing your auto loan within minutes of completing the online application, making it convenient.
Formerly known as MotoRefi, Caribou is another online marketplace for refinancing that started in 2016. Unlike other lenders that typically require mileage to be under 125,000 miles, Caribou can work with you to find financing options on vehicles with up to 200,000 miles. You can finance $10,000 to $100,000 for 24 to 84 months. However, be aware that Caribou charges a $399 administrative fee upfront.
Interest rates start at 1.99% for those with good credit and 2.79% for prime and mid-prime credit, and the cut-off for credit score is 580. Trustpilot rates Caribou 4.5 out of 5 stars based on 457 reviews.
RefiJet is another online marketplace that launched in 2016 and has grown from four employees to over 100. You can refinance starting at $5,000 for 48 to 84 months, with a starting interest rate of 1.99% for qualified borrowers. RefiJet has a minimum credit score requirement of 500 and charges a $395 administrative fee. RefiJet has not been reviewed on Trustpilot yet, but the Better Business Bureau (BBB) gives RefiJet an A+ rating, noting that customer reviews are not used when calculating a BBB rating. RefiJet has a 1.32 out of 5 stars based on 25 customer reviews.
When you decide to refinance your vehicle, you’ll want to take time to research various options, including your local banks and credit unions and online marketplaces. Compare rates, administrative fees, loan terms, and more to ensure you get the best value for your money. Most lenders will provide you with a free quote that will be locked in for 30 days to give you time to complete your research before committing to a lender. Knowing which companies offer the best auto refinance rates is an excellent start.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.