How to refinance a car loan

Refinancing a car can save hundreds, even thousands of dollars over the life of a loan. The process is quick, easy and normally free, too – not like refinancing a home. But there’s more to consider when you’re thinking about a new loan, and it’s best to start with a simple question.

Does refinancing make sense for me?

Here are some situations in which it may be a good idea:

Interest rates drop
If interest rates have fallen since you took out the original loan, and you can get a new rate at least one percentage point below your current APR, you may make a decent saving.

Your credit score improves
Maybe you had bad credit* or no credit history when you bought your car. If things have changed and you’re more creditworthy, you may be rewarded with a lower interest rate.

You didn’t get a competitive rate the first time
When the perfect car is in your sights there’s a temptation to rush into the purchase, and that doesn’t always result in the best financing deal. Shop around for auto refinancing to look for better terms.

Your finances change
Like interest rates, personal finances can change over time. If you need to make savings, or a cash-back payment would help you, consider the options to refinance your car.

The timing is right to make a saving
Bear in mind that, with many auto loans, most of the interest charge is taken over the first half of the loan. Refinancing sooner rather than later could maximize any potential savings. There’s no minimum waiting period before you can refinance, either.

And here are some scenarios where refinancing your car may not make sense:

You’re upside down on your loan
When the value of a vehicle is less than the outstanding balance on the loan, known as negative equity or being upside down, an auto lender might not want to refinance or offer a lower rate.

The vehicle doesn’t meet lender requirements
You may not be able to find refinancing if your car and the amount to be refinanced don’t meet lender requirements. These can include a vehicle’s age, mileage, and minimum and maximum loan amounts. RoadLoans, for example, requires vehicles to be seven years old or newer with fewer than 105,000 miles, and will refinance amounts from $5,000 ($6,000 in California, $6,001 in Massachusetts) to $75,000.

Prepayment penalties are too high
Some auto lenders will charge a fee if the note is paid off early, and if the prepayment penalty eats too far into your potential savings, it may not be worth refinancing the car.

The refinancing terms offered don’t meet your goals
A smaller monthly payment is top of the list for many people wanting to refinance but, if that’s your goal, remember to look at the bigger picture. A lower interest rate may reduce both the monthly payment and the total amount of interest paid by the end of the loan, when the loan term is not extended, or extended by much, which is a win-win situation. However, a lower payment may also result from simply extending the loan term – without an improved APR – which could mean paying more in interest charges in the long run. There are various reasons for seeking auto refinance and, for some, the aim may well be a lower monthly payment in the knowledge they will be paying more in total interest. If approved for refinancing, make sure the terms match your needs.

Ready to apply?

Applying online takes just a few minutes, it’s free, and you’ll get an instant decision.

Get Started

6 Steps to refinance a car

  1. Get the payoff amount
    Call your existing lender or log in to your account to get the payoff amount, which may be different to the outstanding balance on the loan. Make a note of the monthly payment, APR and the number of months remaining on the contract, too.
  2. Check your vehicle’s value
    Look up the value of your vehicle with resources like Kelley Blue Book and Edmunds to see if it’s more or less than the payoff figure, and whether you’re upside down on the loan. Negative equity may put the brakes on refinancing.
  3. View your credit history
    Check your credit reports for errors that could limit your access to credit and the best auto refinance rates. Details of how to check your reports for free are available at the Consumer Financial Protection Bureau (CFPB) website.
  4. Shop and apply
    Finding the best auto refinance rates often means shopping around. Apply with a number of lenders and, if approved, compare terms. Online lenders like RoadLoans enable you to apply in minutes and get an instant decision. The CFPB recommends doing your comparison shopping in a short period of time, generally within 14 – 45 days. That way, multiple credit inquiries will only count as one inquiry and won’t harm your credit score.
  5. Estimate potential savings
    Use an auto refinance calculator to get an idea of what refinancing could save you. RoadLoans’ calculator lets you enter the payoff amount, monthly payment and APR of your current note along with the terms of a new loan to suggest what you may save each month and in interest charges.
  6. Make your selection
    Once you’ve evaluated which loan is best for your situation, complete the lender’s steps to refinance your car. Remember to keep making payments on the existing loan until the transaction is finalized.

Refinancing my car with RoadLoans

RoadLoans offers two attractive auto refinance options: Cash-back refinancing and traditional refinancing.

Cash-back refinancing– Customers may reduce their monthly payment and can tap into the value of their currently financed vehicle to get cash back up to $5,000. That’s money to use as they wish, whether to pay off high interest loans, medical bills or to make a major purchase.†

Traditional refinancing – Customers may be able to lower their monthly payment, APR and skip a payment for up to 60 days.†

As the direct-lending platform of Santander Consumer USA, our online process makes things quick and easy. The simple one-page application is free, takes a few minutes to complete, and you’ll get an immediate decision. We accept applications from consumers with all types of credit, including bad credit and people who have been through bankruptcy, credit counseling or repossession. RoadLoans does not, however, accept applications to refinance a loan from existing Santander Consumer USA and Chrysler Capital customers.

If approved, just download the necessary documents to sign and submit. RoadLoans will handle the rest. We’ll work with your current lender to pay off your existing loan and receive the title to your vehicle, without you having to lift a finger.

See if you can start saving on your auto loan.

Apply for Refinancing 
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Get in touch

If you have a question or need assistance, we’re right here for you.

  • Call one of our highly trained loan specialists at (888) 276-7202.
  • For customer service, dial (888) 222-4227.
  • We’re also available through our online chat service.

These statements are informational suggestions only and should not be construed as legal, accounting or professional advice, nor are they intended as a substitute for legal or professional guidance.

RoadLoans is not a credit counseling service and makes no representations about the responsible use of or restoration of consumer credit.

† View disclosures and offer information.

* “Bad” or “Poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press),,, Investopedia, and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by and Santander Consumer USA.