Key takeaways:

Refinancing is the process of replacing your current auto loan with a new loan.
To determine if refinancing makes sense for you, consider factors like potential penalties and fees, your existing loan balance, credit history, and vehicle’s age.
Evaluate potential auto refinancing loan terms to ensure you get a lower monthly payment, lower interest rate, or more manageable repayment period.

Did you know that refinancing debt is actually a common strategy for dealing with debt issues in your budget? If you’ve budgeted six ways from Sunday and still struggle to free up some cash, there’s another way that could be fruitful — and it’s actually in a surprising place: refinancing the debt you already carry. By changing the terms of a loan, you can have more money on hand in the short term or use it to build up your savings.

What is refinancing?

‘Refinancing’ can sound daunting, but it’s relatively simple when it comes down to it. You’ve probably heard of refinancing a mortgage, car loan, or even student loans. For right now, though, we’ll only talk about what refinancing means as it relates to car loans.

What does refinancing a car loan mean? It really equates to paying off your current loan with a new one so you can take advantage of better loan terms—such as a lower interest rate, monthly payment, or shorter length of your loan.

How do you know if refinancing is right for you? In the rest of this guide, we’ll dig deep into the benefits of refinancing your car, how to know if it’s right for you, and how to make the application process as seamless as possible.

How to refinance my car

1. Make sure it makes sense

Does it make sense to refinance? Here are a few things you’ll want to take into account when deciding if refinancing is the right move for you:

Penalties and fees: Will you incur any penalties and fees if you refinance? Some lenders charge a fee if you pay off your current auto loan early—known as a prepayment penalty. Lenders may also require an upfront fee when you refinance. The cost can vary, so you should compare it with your potential savings to make sure it’s worth it. If the fees eat up the savings, think again about refinancing or check with lending platforms like Upstart, who don’t have any prepayment penalties or upfront fees.
Current loan balance: Is the balance on your current loan more than the value of your vehicle? If the answer is yes, getting a new loan with better terms could be challenging but not impossible. Upstart’s eligibility requirements allow your loan-to-value ratio to be higher than many lenders.
Credit history: To get a new loan with the best terms, your credit history should be in top shape. We’ll explain in more detail later how you can dive deep into your credit reports and scores to ensure you’re in good standing.
Vehicle’s age: There are lenders out there who won’t refinance older vehicles or those with high mileage. For instance, you may have trouble refinancing your auto loan if your car is more than 10 years old or has more than 140,000 miles on it.

2. Examine your credit

If you’ve been making on-time payments for all your bills—including your current auto loan payment—it’s possible that your credit has improved, which makes qualifying for refinancing easier.

You have a couple of options for looking into your credit to make sure you’re all set:

Federal law gives everyone free access to their credit reports once a year from each of the 3 credit bureaus—Equifax, TransUnion, and Experian. You can download these reports from AnnualCreditReport.com to examine your credit history, including any black marks that may affect your score, unauthorized accounts, and incorrect information. Errors in your history may impact your score, so be sure to dispute them. If the agency can’t verify the information, they will remove it from your reports.
Your credit reports do not include your credit scores. Check with your credit card company, as many offer updated scores on your monthly statement or online account. There are also several websites that offer free scores—just be sure to look closely at their terms before you sign up.

3. Collect important documents and information

You may need to compile several documents before you fill out any applications. Here are the most common:

a. Personal information: You’ll need your name, date of birth, Social Security number, and current address. Depending on your state of residence, you may also need a photo of your driver’s license.

b. Proof of income: Pay stubs from your current employer and/or proof of employment will work. You may also need copies of your tax returns.

c. Vehicle and insurance information: Vehicle Identification Number (VIN), make/model/year of your car, your car’s mileage and your proof of insurance should do the trick here.

d. Current loan information: While typically not required for your refinancing application, make sure you have information on the terms of your current loan. This includes lender, current monthly payment, remaining balance, loan term, and interest rate to be able to best evaluate the opportunity for savings.

4. Compare offers

If you plan to go through the process of refinancing your car loan, you might as well shop around. Comparing offers from different lenders is the best way to get the most bang for your buck.

Some lenders may ask for a full credit check before offering any rate information. Lending marketplaces like Upstart, offer rate checks without impacting your credit score.*

If that happens, don’t be too concerned. If you submit multiple loan applications within a short window of time (like 2 weeks), FICO will often combine them into one when calculating your credit score. But if you still feel uneasy about it, you may want to stick with financial institutions where you can get prequalified.

Here’s a short list of details to consider as you compare offers:

Interest rate
Repayment terms
Fees
Any other factors that are important to you

Make sure that the loan terms are what you’re looking for, whether that’s keeping the payment the same for a shorter loan term or lowering your payments with a longer loan term.

5. Check out your savings

Using an auto loan refinance calculator will help you see how much money you’ll save each month and your total savings once you’ve paid off the loan in full. You’ll need to enter information about your current loan—including the amount, interest rate, length of the loan, remaining balance, amount of time left until the loan is paid off—and the repayment terms for your potential new loan.

6. Submit loan applications

Now that you’ve done your research and collected all of your important documentation, it’s time to submit your applications. There are typically a few different ways of doing this, depending on the lender. You’ll likely be able to submit your application online or over the phone, but some smaller lenders may ask you to do it in person.

7. Finish the process

Congratulations—at this point, you’re nearly done! Once you’ve been approved, your new lender will send you the loan paperwork with any additional requests for information. Your loan provider will either transfer the money to you in a lump sum or repay your old car loan themselves. Then, your loan provider will work with the DMV to transfer the title. Finally, you’ll start making payments on your new loan with the terms you’ve settled on.

The bottom line

Refinancing doesn’t have to be scary—as long as you take your time and do your research to consider whether it’s the right move for you, you’ll be golden.

While refinancing can help some borrowers reduce their car payment, it isn’t the only way to improve monthly cash flow. A personal loan through Upstart could also help consolidate higher-interest debts into a single monthly payment, potentially freeing up room in your budget and making it easier to manage car payments. Learn more about your loan options through Upstart and check your personal loan rate online in minutes.

Upstart Network, Inc. (NMLS #936133) is not a lender. All loans on its marketplace are made by regulated financial institutions.

All mortgage lending is conducted by Upstart Mortgage, LLC dba Upstart Home Lending. (NMLS #2443873). Equal Housing Opportunity.

Checking your rate won’t affect your credit score: When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information may be reported to the credit bureaus.
Upstart’s model considers education: Neither Upstart nor its lending partners have a minimum educational attainment requirement in order to be eligible for a loan.
41% more approvals and 33% lower rates than a traditional model: As of publication in April 2026, and based on a comparison between the Upstart model and a hypothetical traditional model using Upstart data from Jan – Dec 2025. For more information on the methodology behind this study, please see Upstart’s Annual Access to Credit results here.
Unsecured Loans: While most loans through Upstart are unsecured, certain lenders may place a lien on other accounts you hold with the same institution. There may be an option to secure your personal loan through Upstart with your vehicle, which will require a lien to be placed on the vehicle. It is important to review your promissory note for these details before accepting your loan.
Loan amounts from $1,000 -$75,000: Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Minimum loan amounts vary by state: GA ($3,100), HI ($1,500), MA ($7,000). Maximum loan amounts may vary by state.
Closing and funding timeline: In April 2026, 10% of funded HELOCs achieved a closing timeline of 2 days or less and a funding timeline of 7 days or less. This timeline assumes consumers close with our remote online notary, provide supporting documentation promptly, and ensure the information provided is accurate and consistent with our verification process. Delays, discrepancies, and other unforeseen factors may impact the closing timeline. MBA’s 2025 Home Lending Study reports an average industry closing time of 37 days.
APRs from 6.2% – 35.99%, with 3 or 5 year terms: The full range of available rates varies by state. The lowest rates are only available to the most qualified applicants. A representative example of payment terms for an unsecured Personal Loan is as follows: a borrower receives a loan of $10,000 for a term of 60 months, with an interest rate of 17.50% and a 7.25% origination fee of $725, for an APR of 21.23%. In this example, the borrower will receive $9275 and will make 60 monthly payments of $252. APR is calculated based on 5-year rates offered in March 2026. There is no downpayment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
Instant deposits: To receive instant funding, your bank account must support instant transfers. If your account does not support instant transfers, funds will be available to you depending on your bank’s transaction processing time and policies.
Always On Commitment: We are committed to maintaining your credit limit as long as you continue to meet program eligibility and account requirements. To ensure the safety and security of all our members, we reserve the right to adjust or close lines in specific circumstances, including account default or late payments, suspected fraud, violation of our terms of service (including abusive behavior), or when necessitated by legal or regulatory requirements.
Cash Line draws: You may request a draw at any time. Only one draw may be outstanding at a time; after it is fully repaid, you may request another.
HELOC APRs as low as 6.52%: Terms shown here are subject to change without notice. APRs for initial advances range from 6.52% to 18.00% based on rates offered as of April 2026. The lowest rate is only available to consumers willing to become a member of a credit union and to those who meet a minimum FICO score of 780, CLTV under 70%, and DTI under 45%. Your actual rate will depend on many factors such as your credit history, combined loan-to-value ratio (CLTV), line amount, loan term, lien position, and property state. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
No annual fee, prepayment penalty, or fees to redraw: Terms shown here are subject to change without notice. Origination fee to open an account is between 0% and 4.99% of the approved credit limit. The Annual Percentage Rate (“APR”) is variable and based on the Prime Rate as published in the Wall Street Journal “Money Rates” table plus or minus a margin. Your APR will never be less than 3.99% or greater than 18.00%. Property insurance is required.
2,500+ Variables:As of 3/31/2026. “Variables,” often also referred to as “features,” refers to raw variables and combined variables considered in our AI models. A “raw” variable is a non-combined, conceptually distinct unit of data, such as “applicant-reported savings.” A “combined” variable is data that has been transformed, combined, or otherwise engineered from a raw variable or set of raw variables, such as “applicant-reported savings” divided by “loan amount.
Fully automated loans: In Q2 2026. Percentage of Loans Fully Automated, which is defined as the total number of loans in a given period originated end-to-end (from initial rate request to final funding for personal loans and small dollar loans, and from initial rate request to signing of the loan agreement for auto loans) with no human involvement required by the Company divided by the Transaction Volume, Number of Loans in the same period.

How to Refinance a Car Loan in 8 Easy Steps