Many people refinance auto loans for various reasons. Refinancing can help you get a lower interest rate, reduce your monthly payments, or adjust your loan term. But, no matter the reason for refinancing, you may be asking yourself, can I refinance my car with the same lender?
For many lenders, the answer is yes. But there’s more to refinancing than simply refinancing a car loan with the same lender, even if you’ve had a strong, long-lasting relationship. Many things go into deciding whether to refinance your auto loan with your current lender. For one, not all lenders offer refinancing. Even if your lender does, it’s always good to double-check if you’re getting a better deal.
Refinance Your Auto Loan
Different lenders offer different interest rates, loan terms, and fees, so it’s wise to shop around and compare before you enter into an agreement with your existing lender. Shopping around for a new lender is recommended because you may end up with a good deal that can save you money over time.
Find out when it makes sense to refinance with the same lender and when to shop around for a new lender.
When Does It Make Sense to Refinance?
Refinancing isn’t meant for everyone. While it may be the best option to refinance for another person, it may not be ideal for you. Knowing when to refinance will give you a better idea of when the time is right. Here are a few situations where you may want to consider refinancing your car loan.
Lower Interest Rates Available
If you have a chance to get a lower interest rate, refinancing might be advantageous. A lower interest rate could mean lower monthly payments, which could eventually save you money that you can use for other financial obligations.
Lenders look at several factors to determine an auto loan’s annual percentage rate (APR). One of the most apparent aspects is your credit score. If your credit score has improved since you took your first loan, you may qualify for lower rates when you refinance.
But if your credit isn’t good, refinancing with a co-signer could help you get the best interest rates.
Better Personal Finance Situation
Maybe you took a car loan when your financial situation was terrible and got unfavorable terms from your lender. If you’ve improved your credit score and lowered your debt-to-income (DTI) ratio, refinancing may help you qualify for better interest rates and terms.
Looking for a Better Car Loan Offer
You may have received an offer that’s not suitable during your first loan application, especially if you got your original loan from a car dealership. Car dealerships often charge high-interest rates compared to online lenders, banks, and credit unions.
Refinancing may help you get a better car loan offer in such a circumstance. This can include lower interest rates, fewer fees, and even lower monthly payments.
Want to Lower Your Monthly Payments
Perhaps you’re in a situation where keeping up with your monthly payments and bills has become a challenge. In that case, you may want to consider refinancing your car loan to get lower monthly payments. This will help free up some cash that you can use to cover personal expenses.
Even if your credit score or DTI ratio doesn’t qualify you for a lower rate, you can adjust your loan term to reduce how much you owe each month. However, extending your loan repayment term comes with trade-offs 一 you may end up paying more overall than you would if you took a shorter-term loan.
Refinance Your Auto Loan
Your Car Is Aging or Has High Mileage
Another reason to refinance your auto loan is if your car is aging or has high mileage but has not yet reached any relevant limits. What do we mean by that? Most lenders do not refinance car loans on vehicles that have reached a certain age and mileage. While these restrictions may vary from one lender to another, lenders generally do not refinance vehicles older than 10 years (sometimes seven years) with more than 100,000 miles on them.
If your car is approaching the mentioned age and mileage, it might be a good time to refinance.
Should You Use the Same Lender to Refinance Your Car Loan?
In most cases, you probably can. But that doesn’t mean it’s the right decision for you. The only upside of using the same lender to refinance your car loan is that you’ll have less paperwork since you are already their customer.
While it may seem easier to stick to your current lender, it’s prudent to shop around as you may find a better deal elsewhere. Finding the most favorable loan terms 一 better interest rates and suitable loan terms 一 should be your priority. In addition, most lenders have a streamlined application process, so switching to a new lender shouldn’t be an issue.
However, it’s crucial to review your loan terms with your current lender because paying off your existing auto loan early may result in a prepayment penalty. And if it does, compare the penalty to the amount you’ll save on better terms when you refinance.
The bottom line is that it might be worth it to shop around for a new lender.
Where Can You Compare Lenders to Refinance Your Car Loan?
The best place you can compare lenders to refinance your auto loan is online. Typically, online lenders offer competitive interest rates and lower monthly payments. However, choosing the right online lender can be overwhelming, given that there are several options out there. You’ll be glad to know that we’ve done the heavy lifting for you.
Auto Approve is an all-in-one online platform with a network of lenders that makes it easy to refinance your vehicle and get a car loan. The online lender is ideal for anyone looking for competitive rates and who wants to pay less money on their car loans.
Why Work With Auto Approve?
- Offers competitive rates: With Auto Approve vehicle refinance, you’ll pay less on your loan. Interest rates start from 2.25% APR, so it will help you save a lot of money over time, and you can allocate the money you pocket to other financial obligations.
- Get the personalized service you deserve: You’ll get the service that works best for you when you refinance with Auto Approve. They ensure that you get the best deal possible for you without any markups on the rate you pay.
- Streamlined application process: Auto Approve makes auto refinancing simple, so it will only take you a matter of minutes to get a quote. The good thing is that no Social Security number (SSN) is required to get a quote, and Auto Approve handles the paperwork when you apply for a loan, including the DMV.
If you’re looking for competitive interest rates or want to lower your monthly car loan payments, get a quote for Auto Approve vehicle refinance today.