The 4 Drivers Who Should Refinance a Car Loan

By Upstart Content Team | Updated March 2, 2026
reading time 2 min read

Do you ever get that nagging feeling that maybe you could be getting a better deal on your auto loan? Refinancing a car loan won’t help in every case, but for many people, it could make a world of difference. 

The key is to know whether you’d benefit from a car refinance or not. People have a lot of good reasons to refinance. If any of these sound like you, chances are it could really help you:

1. Do you want a lower monthly car payment?

The average monthly car payment in 2021 for a used car is $430, according to Experian. That’s a lot of money to pay, especially if you’re having trouble making ends meet. 

One of the benefits of refinancing is that you can often refinance your car loan for a longer term length. This spreads out your payments more over time, so each one is lower.

The downside is you’ll be paying for a longer amount of time, and you might end up paying more interest over the life of your loan as a result. But if you’re having trouble making your monthly payments, it can definitely help reduce the amount of financial stress in your life. 

2. Do you want to pay less over the life of your loan?

Wouldn’t it be nice if you could keep as much money in your bank account as possible instead of sending it to a lender? That’s another major reason why people refinance a car loan — to reduce the amount of interest that they pay on their loan. 

This can happen in two ways. You can refinance for a shorter term length and/or a lower interest rate. Either of these scenarios can result in you paying less interest over time. Of course, if you can do both, then you get even more savings. 

3. Did your credit score or financial circumstances change?

If you’re like most people, your credit score will increase over time as you learn how to manage your credit and grow your credit history. Your finances might also improve if you progress through your career and earn raises. 

These are all great times to refinance, especially if you were in a less-than-ideal situation when you took out your car loan in the first place. Even if you are working on building your credit score, it’s worth checking your car refinance options from multiple lenders.  

4. Do you want to remove a co-borrower or cosigner from your loan?

Cars are expensive, and you might have shared the car (and the loan) with another person, a co-borrower. Or, maybe your credit score wasn’t the greatest when you took the loan out, and you needed a cosigner on the loan. 

If your circumstances have changed and you’d like to have the co-borrower or cosigner take off the loan, refinancing a car loan can be a great way to do it. 

*This content is general in nature and provided for informational purposes only. This content is not specific to Upstart, except where explicitly stated. This content may contain references to products and services offered through Upstart’s credit marketplace. Upstart is not a financial advisor and does not offer financial planning services.

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About the Author

Upstart Content Team

The Upstart Content Team develops educational content grounded in research and real-world financial experiences. By breaking down complex topics into clear, actionable insights, the team helps readers navigate important decisions—so they can feel confident in the money moments that matter.

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