Refinancing from Loans Canada

- Compare different quotes
- Refinancing rates from 7.99%
- Loan terms from 3 - 60 months
Refinancing a car loan in Canada may help you save money on your monthly repayments by giving you lower interest rates. Alternatively, it could extend your loan term so that your monthly payments become more affordable. However, auto loan refinancing is not for everyone. Find out when you should refinance a car loan, where you can apply and the steps to refinancing.
Yes, you can refinance a car loan by replacing your existing car loan with a new one that has better terms. You typically only refinance a car loan if you think you can qualify for better interest rates. For example, you might want to refinance your car loan if your credit score has improved or you’re earning a much higher income.
When you decide to refinance, you’ll apply for a new loan with a new lender or with your current lender if they’re willing to give you a better offer. You can use the money you borrow to pay off your old car loan plus any fees for paying off your loan early. From there, you’ll make regular payments on your new car loan and hopefully save some money in the process.
If you’re looking to refinance a car loan in Canada, you can easily compare some popular options below.
Refinance car loan lender | APR | Loan Term | Min. credit score | Other requirements | |
---|---|---|---|---|---|
![]() | 0.99% - 46.96% | 3 - 60 months | 300 | Min. income of $1,800 /month, 3+ months employed | |
![]() | Varies | 24 - 84 months | 650 | Able to service debt payment of $300/month | |
![]() | 6.99% - 46.96% | 72 - 84 months | 550 | No min. income requirement | |
![]() | Unspecified | 1 – 8 years | Unspecified | Earn min. $17,000 annually, meet standard lending criteria | |
![]() | 7.49% - 34.99% | 12-96 months | 300 | Min. income of $2,000 /month, 3+ months employed |
You’ll typically only want to refinance a car loan in a few situations.
You should avoid refinancing a car loan in the following situations:
You can refinance a car loan with bad credit, but you’ll want to make sure it’s a smart financial move. This will only be the case if you’ve improved your credit rating since you first applied for your car loan (even if your score is still under 660). It could also make sense to refinance with bad credit if you have a higher income or you’ve paid off significant debts.
Another reason you might like to refinance a car loan with bad credit is if you can’t afford your current monthly payments. In this case, you might be able to refinance for a longer term to lower your monthly payment. Just be aware that this means you’ll pay more in interest over time unless you’re also able to secure a lower interest rate.
If you’re wondering who will refinance a car loan with bad credit borrowers, check out Loans Canada (minimum credit score of 300) or LoanConnect (minimum credit score of 550).
You typically shouldn’t refinance a car loan if you already owe more than what your car is worth (which is what being upside down on your car loan means). Lenders will usually charge you higher rates since your asset won’t cover your loan payments if you default.
You may want to consider waiting until your payments catch up to the value of your vehicle. If you just want to get rid of the debt quickly, you can also consider selling or trading in your vehicle for a less expensive one and using the difference to pay the remaining balance that you owe.
You’ll want to compare the following features of your refinance loan to make sure it’s a good fit for you:
Use the car loan calculator below to find out how much you might pay in monthly payments with a new rate and/or loan term.
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If your income is higher or you’ve recently paid off other debts, getting a shorter loan term can save you money by paying less interest over time. On the other hand, if your finances are getting a little tight, a longer loan term can lower your monthly payments. While you’ll end up paying more interest overall, the lower repayments can give you some breathing room every month.
Lenders will want to look at the following factors when deciding whether or not to approve your car loan refinance application:
How to improve your credit score
Here are 8 simple steps for how to refinance a car loan in Canada.
Check your loan statement or log in to your account to find the following information:
While you’re reviewing your loan documents, weigh any fees you’ll be charged for paying off your loan early against potential savings from refinancing an auto loan to make sure it’s worth it.
Your car’s current value will determine how much you need to borrow — and if refinancing your auto loan is a viable option. To get an idea of how much your car may be worth, visit sites the Canadian Black Book or Autotrader.ca. Your vehicle’s make, model, mileage and condition, as well as where you live will all impact its overall value.
If your car is worth less than the amount you want to borrow, you could end up paying much more for your car than it’s worth. Instead, you might want to consider selling it privately or trading it in at a dealership for a less-expensive alternative.
Factors like your credit score, debt-to-income (DTI) ratio, current loan amount and vehicle will all play a role in whether your application to refinance your car loan is approved. Use a free online tool to check your credit score and calculate your DTI ratio to get an idea of lenders you might qualify with.
Many car loan refinancing providers also have a minimum loan amount they’re willing to refinance, which may be around $5,000 or more. If your current car loan is less than the lender’s minimum, your application won’t be approved. Lenders also have limits on the car itself: A vehicle over 10 years old or with more than 150,000 kilometres will be much more difficult to refinance than a newer vehicle with less mileage.
Every lender is different, so review its specific eligibility criteria before you apply to avoid a rejection and an unnecessary hit to your credit score.
Research lenders, like the ones listed above, that offer to refinance car loans to see what eligibility requirements you’ll need to meet and how much you may be able to borrow. When comparing your options, consider the cost, term and how much your monthly repayment will change with your new loan.
Loans Canada Car Loans
Loan Amount
$500 - $35,000
Loan Term
3 - 60 months
Interest Rate
0.99% - 46.96%
LoanConnect Car Loans
Loan Amount
$500 - $50,000
Loan Term
72 - 84 months
Interest Rate
6.99% - 46.96%
Many car loan refinancing providers offer pre-approval, which allows you to see what rates and terms you might qualify for before completing a full application — and taking a hit to your credit score.
Pre-approval forms are generally available on the lender’s website, and you may know your potential terms within minutes of submitting it.
Every lender has a different process, but most ask for some or all of the following information at some point in the application process:
Information about your loan
After you’ve received a few pre-approval offers, calculate your new monthly payment to see if you’ll actually save money by refinancing. You should also consider outside factors like perks and discounts to make sure you’re getting the best deal available to you. Most importantly, compare your new loan against the terms of your old one. If your previous car loan has a prepayment penalty or if the new car loan has a higher rate, it may not be worth refinancing.
Once you’ve decided on a lender, reach out to submit a full application. If approved, review your new loan documents to make sure you understand the lender’s terms and conditions. Confirm your new payment due date, interest rate, loan term and potential fees. If you agree to the terms, sign your loan documents to finalize the agreement.
Your new lender will either pay off your old car loan directly or transfer the funds to your account so you can pay it off yourself. Regardless, reach out to your old lender to confirm your payment has been processed and your account has been closed to avoid any headaches down the road.
Exploring your options for refinancing a car loan doesn’t have to be a complicated process. As long as you know how to compare new loans against your current loan, you may be able to find a better deal that lowers your interest rate or monthly repayments – or both. Just make sure to consider all of your options and your current financial situation before applying.
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