Auto LoansAuto RefinanceRefinance Your Car Loan

Do I Need a Vehicle Appraisal to Refinance My Car?

There can be sound reasons to refinance a car or truck to put money back into your wallet. Consumers may discover they are locked into a high interest rate on their original financing and are strapped to make the payments. Essentially the consumer can pay off the original vehicle loan and refinance the car with today’s lower interest rates. However, a lender may resist granting a new loan for a car that’s too old or has too large an outstanding loan balance. This can be especially true if the car loan is upside down: the vehicle is worth less than the existing balance. For that reason alone, consumers should determine the payoff amount on their original loan to determine the amount they intend to borrow.

Qualifying without a Car Appraisal

Lenders will certainly evaluate the value of a car when reviewing an application for refinancing, but they will not require a formal, professional car appraisal to make their qualifying decisions. The notion that lenders require an appraisal is the stuff of fairy tales and bad gossip. Instead, lenders calculate a loan-to-value (LTV) ratio using Kelley Blue Book or other industry-standard valuation data. Borrowers can estimate their car’s current value at websites such as,, and It’s imperative to know whether refinancing is appropriate given the amount of money they still owe when mapped against the vehicle’s value. At the same time, it is crucial for refinancing applicants to inspect their original loan for any penalties they’ll be assessed for paying it off earlier than on schedule. In some cases, the cost of paying off loan penalties may offset the savings of refinancing at a lower interest rate.

LendingTree’s Auto Refinance Calculator can help borrowers compare what they currently pay on their original auto loan with projected monthly payments based on current refinancing rates. Borrowers should compare offers to see if they can lower interest rates, shorten the term of their loan, or reduce their monthly payments. Fees associated with a refinancing loan include lien-holder fees ($5 to $10), state vehicle re-registration fees ($5 to $75) and any pre-payment fees (determined by the lender).

Support Materials for a Car Refinancing Loan Application

In lieu of a formal car appraisal, lenders typically require applicants to submit information about their current loan (balance/payoff amount, term and interest rate, number of remaining payments, and the current monthly payment). In terms of personal information, lenders will definitely ask for employment status and proof of income. Submitting requests for offers is the best way to find the best refinancing loans based on interest rates and terms.

Initial payments on auto loans generally go toward paying for interest. Even without conducting a car appraisal, owners should realize that the earlier they can refinance their vehicle, the greater the potential for savings. A good rule of thumb is to refinance the vehicle before it is four years old. Paying an additional amount on the principle each month can also help retire the loan more quickly. But beware of payoff penalties!


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