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When Can I Refinance My Car Loan?

woman looking at phone in car

Refinancing your auto loan can save you money on interest, lower your monthly payments, or potentially do both. With online lenders reducing the hassle of the refi process, it can be a no-brainer for some people. But if you only recently bought your car, or you’ve had it for a few years, you might be wondering:

  • “When should I refinance my car?”

  • “How soon is too soon?”

  • “Is it too late to refinance?”

To remove the guesswork, here are five signs that could indicate now is a good time to refinance your car.

  1. You purchased and financed a vehicle at a dealership
  2. Did you buy and finance your car at a dealership? You’re not alone – over 85% of new vehicle sales and over 54% of used vehicle sales are financed.1And if you bought your car at a dealership, there’s a good chance you financed it there, too. What you may not know is that dealer-financed auto loans are often not the best deal.

    Auto dealers can mark up your interest rate, charging as much as 3% more than the APR you could’ve qualified for with another lender.2

    Want to know if you can do better? It takes just one minute to check your auto refinance rate with Lending Club, and it doesn’t affect your credit score.*

  3. You’ve had the loan for at least 90 days
  4. How soon can you refinance a car you just bought?

    Most lenders require that you’ve had the loan for a few months before you apply (at Lending Club, the minimum is 90 days). This is usually to confirm that you’re making on-time payments, so stay on top of those payments if you’re hoping to refinance in the near future.

  5. Your current loan term is longer than 24 months
  6. On the flip side, if you don’t have long to go before paying off the loan, you may not be able to refinance. At Lending Club, we require at least 24 months remaining on the term.

  7. Your credit has improved
  8. Has your credit score increased since you took out the loan? Have you consistently paid your debts on time? If so, you may qualify for a lower rate than you did when you first bought the car—which means savings in your pocket.

    You can check your credit report for free on an annual basis to monitor whether things are looking up.

  9. You could use the extra cash

Refinancing at a lower rate can lower your interest bill (Lending Club auto refinance borrowers could save up to $1,350).3 However, you can also refinance to lengthen your auto loan’s term and reduce your monthly payment. If bills are tight, refinancing to lower your payments may be the solution you’re looking for.

When Should You Refinance Your Car?


Auto refinancing can make a lot of sense in some situations. In fact, many people don’t refinance their car even though they would qualify, simply because they think the refinance process will be long and arduous. That’s simply not the case anymore—Lending Club’s auto refinance process is completely online and hassle-free.

If you want to know whether now is the time to refinance your car, check your rate now to get the answer in less than a minute, with no impact to your credit score.

1 https://www.nada.org/WorkArea/DownloadAsset.aspx?id=21474839497
2 http://www.responsiblelending.org/state-lending/auto-loans
3 Based on analysis of 300,000 consumer accounts from Q4 2012 to Q3 2013 using credit bureau data. Assumes the consumer refinances with the lowest rate for which they are eligible and does not extend the term of the loan. Savings figure is based on a refinance from an average APR of 11.45% to an average APR of 8.2% and 60 months remaining on the term of the loan. Your actual savings may be different. A representative example of payment terms are as follows: an Amount Financed of $18,000 with an APR of 8.20% and a term of 60 months would have a monthly payment of $366.70

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