Can I Refinance My Car With the Same Lender?
If you’re thinking about refinancing a car, using your current lender again probably seems like the obvious choice — but it’s not necessarily your best option.
Refinancing your car with the same lender will likely speed up the application process, since they’ll already have your information on file. However, some lenders don’t refinance their own loans, and those that do might not offer the best deals. Getting quotes from several lenders will allow you to choose the loan with the terms, rates and monthly payments that fit your needs and financial goals.
Can you refinance a car loan with the same bank?
Whether you can refinance a car loan with the same lender will depend on your lender. Your bank may have mileage restrictions or require you to make a certain number of payments before you can refinance. Some lenders, like PenFed Credit Union, do not refinance their own auto loans.
The best way to learn whether you can refinance your car with your current lender is to check out their website or give them a call.
While your original auto lender may be able to offer the best terms on an auto loan refinance, you may find a better deal elsewhere. Before you shop around, read our tips for avoiding common car refinancing mistakes.
What does refinancing a car mean?
When you refinance a car, you exchange your current car loan for a new loan with different terms, rates and monthly payment amounts. Ideally, your new loan will benefit you financially by offering one or more of the following:
- A lower monthly payment, which will help if you can’t make your current payments
- Lower interest rates, which will allow you to pay less money over time
- Better terms, like a longer repayment period
How does refinancing a car work?
We recommend following these steps to get the best rates when you refinance your car:
- Read the terms of your current loan to make sure you won’t need to pay a prepayment penalty when you exchange your existing loan for a new one.
- Shop around. Get a quote from your current lender and several additional lenders to ensure that you get the best rates and terms for your current financial situation.
- Compare quotes. Use an auto refinance calculator to determine which refinancing offer will help you save the most money over time.
- Submit your application for auto refinance. The steps you’ll take when you apply for a car refinance loan will be similar to the ones you took when you applied for your first auto loan. Once you’re approved, the new loan will replace your existing one, and you’ll start paying off the new loan according to the updated terms.
When should I refinance my car?
There are two good times to refinance a car: if you can get a better (lower-cost) loan, or if you need a more affordable monthly payment.
You want a better loan
If your goal is to pay less on your loan over time, refinancing may help. You’re most likely to get a lower rate or better terms if one or more of the following has happened since you took out your original loan:
- Interest rates have dropped
- Your credit improved
- Your car gained equity (meaning the value of your car is greater than your loan balance)
You can’t afford the monthly payments
If your budget is tight, refinancing may give you some breathing room. It might allow you to decrease your monthly payments with a lower interest rate or by stretching out your loan repayment over a longer period. Just note that you’ll pay more interest over the life of the loan with a longer repayment period, increasing your total cost to borrow.
If you have dealer-backed financing, you might also get a more affordable loan by refinancing through a bank or credit union.
Is refinancing a car worth it?
Refinancing a car can be worth it if you secure better terms that help you afford your current monthly payment or pay less on your loan over time.
You could find a lower rate
Each lender has a unique range of APRs based on several variables. Shopping around for a car refinance loan can help you discover the lowest rates available for your vehicle, your credit scores and your financial situation. You may even be able to use low-rate quotes to help you negotiate a better deal with your original lender.
You could qualify for better terms
Lower interest rates aren’t the only reason to refinance your car. Some lenders offer unique refinancing terms, including no down payment requirement, extra-long repayment periods or a 60- to 90-day grace period before your first payment is due.