Editor's choice: LendingClub Auto Refinancing
- No origination or prepayment fees
- Easy-to-use website
- Check rates without Social Security number
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Refinancing your car loan is a great way to save if your income or credit score have increased since you first took out the loan. If you’re able to qualify for a lower rate, you can save big on both the monthly and long-term cost of your loan. But try to avoid extending your loan term, which will increase the amount of interest you pay overall.
You might be able to get a better deal if you waited to refinance your car loan during the coronavirus outbreak. After the Federal Reserve lowered rates to between 0% and 0.25% on March 16 2020, many car loan providers also lowered their rates.
But you’ll still need to shop around to make sure you’re getting the most competitive rate. And you still need to meet the lender’s requirements — which typically include having good credit and a steady source of income.
You might not need to refinance if you’re struggling with monthly payments during the COVID-19 outbreak. Many car loan providers are offering relief to borrowers who are struggling to handle car loan repayments.
|Lender||Type of relief||Customer service helpline||Where to find more info|
|Acura Financial Services||Acura is offering the following types of relief for current customers|
You can request relief online or call customer service.
|Ally||Ally is allowing customers to defer repayments on car loans. You can sign up for deferments online or by phone.||888-925-2559||Learn more|
|Bank of America||Bank of America is offering payment deferral for customers. You can apply by filling out a payment assistance request online.||800-215-6195||Learn more|
|BMW Financial Services||BMW Financial Services is offering payment relief on a case-by case basis. It recommends sending an email or using its messaging service to get in touch if you’re struggling with repayments.||800-578-5000||Learn more|
|Capital One||Capital One is offering hardship assistance on a case-by-case basis.||800-946-0332||Learn more|
|CarMax||CarMax is waiving late fees and offering payment extensions to current customers.||215-377-9187||Learn more|
|Chase Auto Finance||Chase is offering payment assistance and lease extensions for up to six months to current customers.||Learn more|
|Chrysler Capital||Chrysler is offering payment extensions and deferment to loan customers. Lease customers can also request a lease-end extension or deferred payments.||855-563-5635||Learn more|
|Ford Motor Credit||Ford is allowing lease and loan customers to defer or delay repayments on a case-by-case basis.||800-723-4016||Learn more|
|Honda Financial Services||Honda is offering late fee waivers, payment deferrals and payment extensions for current customers.||Customer service phone number varies by state||Learn more|
|Hyundai Finance||Hyundai is offering up to 30 days of payment deferrals for new and current customers who’ve faced financial hardship due to the outbreak.||800-523-4030||Learn more|
|Infiniti Financial Services||Infiniti is offering deferred payments, payment extensions and automatically waiving late fees for loan customers. Lease customers can also extend their current lease for another month if the end date is coming up.||800-627-4437||Learn more|
|Kia Motor Finance||Kia is allowing loan and lease customers to defer payments for up to 30 days if they’ve been financially affected by the coronavirus outbreak.||866-331-5632||Learn more|
|Lexus Financial Services||Lexus is offering payment deferment and extensions, as well as end-of-lease extensions to customers on a case-by-case basis.||800-874-7050||Learn more|
|LightStream||LightStream is offering payment deferrals for up to 180 days to current customers on all loan products, including car loans.||LightStream asks customers to email email@example.com||Learn more|
|Mercedes-Benz Financial Services||Mercedes-Benz is offering loan or lease payment deferrals. It’s also automatically waiving all late fees from March 15, 2020 to May 15, 2020.||800-654-6222||Learn more|
|Nissan Motor Acceptance||Nissan is offering customers payment deferrals and extensions. It’s also automatically waiving late fees between March 13, 2020 and April 30, 2020.|
If you’re near the end of a lease, you can extend it by another month if there’s no way to return your car.
|Santander||Santander is offering customers payment extensions on loan products, which you can apply for by logging in to your account.||888-222-4227||Learn more|
|Toyota Financial Services||Toyota is offering payment deferral and extensions to loan customers. Leasing customers can also request a lease maturity extension if you can’t return your car.||800-874-8822||Learn more|
|USAA||USAA is offering 90-day payment extensions on loans, including auto loans.||855-764-4617||Learn more|
|Wells Fargo||Wells Fargo is offering a three-month payment deferral to auto loan customers and waiving late fees through May 31, 2020.||800-289-8004||Learn more|
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Ideally, it will cost you nothing to refinance in the long run. In fact, refinancing can ultimately help you save money by giving you a lower rate. However, these savings might be offset by a few fees:
Lenders sometimes cover the title and reregistration fee, but not in all cases. Use the calculator below to find out how much a new car loan would cost each month to see if your savings are worth it.
Car loan refinancing involves taking out a new loan to pay off your old one, usually with lower rates and more favorable terms.
The new loan amount typically covers the amount remaining on your previous loan, including any prepayment fees or closing costs. When you compare your refinancing options, you’ll want to be looking for the deal that saves you the most money every month and over the life of your loan.
Even if you can’t score a lower interest rate, you may be able to extend your loan term. But this method has its pros and cons. Your monthly payments may be lower, but you’ll often end up paying more in interest than if you’d stuck with your original lender.
Generally, auto loan refinancing isn’t the best choice unless you can be sure your new loan will really cost you less. Consider talking to your lender about your options if you’re struggling with the monthly cost.
Auto loan refinancing can be helpful if you’re trying to save, but there are some drawbacks that might have you considering other options.
You should refinance your car loan if your credit and income have improved since you first took out the loan. Even if it hasn’t changed, refinancing can also help if you think you can qualify for a lower rate with another lender.
Generally, you should avoid refinancing if your financial situation has changed for the worse. And if your lender charges a prepayment penalty, refinancing can make your car loan more expensive.
Refinancing is different from taking out a new car loan because you’re using the funds to pay off debt, rather than buy a new car. This means that you won’t have to negotiate the price with dealerships or private sellers.
It also typically comes with lower rates than your average car loan. But there are also fewer options available for borrowers with bad credit.
The refinancing process varies depending on your lender. However, you generally need to review your current loan, credit score and check the value of your car before comparing lenders. That way you can rule out providers that you can’t qualify with.
Consider applying for preapproval with your top choices after a quick comparison to see what rates and terms you might get. After you apply for your loan and sign the contract, make sure your new lender paid off your old car loan before you start to make repayments.
In order to complete the refinancing process, you’ll need to provide information about yourself and your vehicle, just like when you applied for your original loan. Your lender will typically also request information about your current loan so it can calculate a competitive offer.
Every lender has a different process, but most ask for some or all of the following information:
Information about your loan
Every lender offers different terms and features, so don’t let a low potential APR dazzle you. Take your time and compare everything that goes into borrowing, including the lender’s legitimacy and the fees it charges.
You can, but you’ll want to make sure it’s a smart financial move. If you borrowed your first car loan at a similar credit rating, you’re unlikely to really lower your interest rate by refinancing. But if your score has increased slightly, you might be able to qualify for a better deal with another lender that’s willing to work with bad-credit borrowers.
It’s possible, but it might not be the best idea. If you’re already upside down on your car loan — meaning you owe more than the car’s worth — you may have to put up additional collateral to cover the remaining loan balance.
Refinancing can help you turn your car loan around and avoid defaulting. Some lenders even offer loans specifically for this situation. However, not all lenders are willing to work with upside-down car loans, so you might want to reach out to customer service first to make sure you’re eligible.
Learn more about how it all works by reading our guide to car loans.
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