What are typical auto loan refinance rates?

Refinance rates vary by credit score, loan amount, vehicle age, and lender. Rates typically range from around 3% to 20%+, with better credit scores getting lower rates. Your current rate and market conditions also affect what you can get.

How much lower should my refinance rate be?

A meaningful improvement is often 2% or more. However, rate alone doesn't tell the whole story—you also need to consider fees, term length, and total remaining cost. A 1% drop might be worth it if fees are low and the term stays similar.

Why might my refinance rate be higher than my current rate?

Your credit may have changed, market rates may have risen, your vehicle may be older, or your loan-to-value ratio may be higher. If you can't get a lower rate, refinancing may not make sense unless you need a lower payment (which could come from a longer term).

Auto loan refinance rates

Refinance rates determine how much interest you'll pay on a new loan. This page explains what rates to expect, how they compare to your current rate, and why rate alone isn't enough to decide.

What are typical refinance rates?

Auto loan refinance rates vary widely based on several factors:

Credit score: Higher scores typically get lower rates. Excellent credit (720+) might see rates around 3–6%, while lower scores (600–650) might see 10–15% or higher.
Loan amount: Larger loans sometimes get better rates, but this varies by lender.
Vehicle age: Newer vehicles often get better rates. Many lenders won't refinance vehicles older than 10 years.
Loan-to-value (LTV): Lower LTV (more equity) can help with rates.
Market conditions: Interest rates change over time based on broader economic conditions.

Rates typically range from around 3% to 20%+, but your specific rate depends on your situation and the lender.

How much lower should the rate be?

A common rule of thumb is to look for at least a 2% APR improvement. However, rate alone doesn't tell the whole story:

Fees matter: A 1.5% rate drop might be worth it if fees are low, but not if fees are high.
Term length matters: A lower rate on a longer term might not reduce total cost as much as you think.
Break-even matters: If fees are high, it might take a long time for the rate savings to pay back the fees.

Always compare total remaining cost, not just rate. A 1% rate drop that reduces total cost by $500 might be worth it, while a 2% drop that only saves $200 might not be if fees are $300.

Why might my rate be higher?

Sometimes you can't get a lower rate than your current one. Common reasons:

Credit changed: If your credit score dropped since you got the original loan, you might not qualify for as good a rate.
Market rates rose: Interest rates change over time. If market rates have gone up, you might not be able to beat your original rate.
Vehicle is older: As your vehicle ages, some lenders offer less favorable rates or won't refinance at all.
Loan-to-value is higher: If you have less equity (or negative equity), rates might be higher.
Original rate was promotional: If you got a special promotional rate when you bought the car, you might not be able to match it now.

If you can't get a lower rate, refinancing may still make sense if you need a lower payment (which could come from a longer term), but be careful about total cost.

How to shop for rates

When shopping for refinance rates:

Get multiple quotes: Different lenders offer different rates. Check credit unions, banks, and online lenders.
Compare the full offer: Don't just compare rates—compare APR, term, fees, and total remaining cost.
Ask about fees upfront: Some lenders have application fees, origination fees, or other costs that affect the real cost.
Check your credit first: Know your credit score before you shop, and consider whether it's worth improving it first.

Rate vs. total cost

A lower rate is good, but it's not the only thing that matters. A 2% rate drop that saves you $1,000 in total cost is better than a 3% rate drop that only saves $500 because of fees or term changes.

Always calculate total remaining cost (what you'll pay from today to payoff) for both your current loan and the refinance offer. That's the number that matters most for long-term savings.