If you are considering refinancing your car or truck loan, there are several auto refinance companies to choose from. Refinancing is not a difficult process, but it is important to do your homework and choose the right loan provider.

How Refinancing Works

When you refinance a car or truck loan, the new loan provider will send you a check to pay off the full amount of the old loan.  Then going forward, you will make payments to the new lender under new terms.

Verify Your Information

Before contacting new loan providers, check in with your current lender to be sure you have accurate details about your current loan.

First, verify your current loan’s annual percentage rate (APR), which is the interest you pay on the loan each year.  Next, double-check your current loan term, which is the length of time designated for paying off the loan.  Now that you know the basic information about your current loan, you’ll be able to accurately compare it with alternatives offered by other loan providers.  This is also a good time to make a note of the make, model, year and vehicle identification (VIN) number for your car or truck.

Go Short Term

You might be tempted to refinance with a longer term loan in order to reduce your monthly payment. If you go this route, remember that you will generally end up paying more in the long run. For example, a 36-month term, $15,000 loan at 6.5% APR carries a monthly payment of $306. In this case, the total interest paid over the life of the loan is $1,550. The same loan extended to 60 months has a lower monthly payment of $293, but the total interest paid is $2,610. Also, longer term loans often have a higher APR than shorter term loans, which means the total interest paid is even greater. So, even though shorter term loans often have a higher monthly payment, the total amount owed is less.

Also, with a long term loan, you won’t build equity or have some ownership in the vehicle as quickly.  With a long term loan it might take 1-2 years before the car’s value is more than you owe on it. This is because the loan covers the value of the car plus interest. If you need to sell or trade-in the car early, you might not get a price that will cover what you owe on the loan. With a shorter term loan, you are more likely to avoid this situation.

Choose Your Lender

For each lender you contact, it will be important to compare the below factors to your current loan:

  • APR
  • Loan term
  • Monthly payment

Our auto loan calculator is helpful for quickly comparing different lending options.

Lenders may be local or national, and each type offers different benefits. If you’ve never heard of a lender, it is advisable to check their reputation with the Better Business Bureau (BBB).  The lender’s level of customer service and turnaround time for loan approval and processing are other important factors to consider.

Your bank may be a good place to start looking for refinancing options. Credit unions also provide loans but only to members, so you would need to join. It may be worth joining a credit union if the loan terms are favorable. Online banks/lenders are another option you can try, but make sure they have a good BBB rating.

There are also many helpful online services, like CARCHEX, that allow you to compare rates from a large number of lenders at once. This type of service can be advantageous for finding attractive rates quickly.


Before refinancing your car or truck loan, make sure you understand the different aspects of various vehicle loans and and have checked out several auto refinance companies.

About The Author


Joe Campanella is the EVP of Business Development for CARCHEX and oversees partner relationships. Joe possesses 12+ years of experience building sales/customer service teams and securing strategic partnerships. He is a sports enthusiast who enjoys mountain biking, surfing and snowboarding in his spare time.

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