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Can I Refinance My Car with the Same Lender?

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There are many reasons why people refinance their car, as the monthly payments can get to be a lot at times. When looking to refinance your car, your first choice might be to go through the same lender that you financed your car loan through. While this route appears logical, a majority of lenders will not refinance a loan they have already issued. So your best bet is to ask your lender, but plan to shop around. On the off chance the current lender does offer to help, you still want to find your best offer, and you got the higher offer from the current bank in the first place, so odds are you won’t find your best offer there.

There are plenty of things to consider before deciding on which lender to go through. Look for lenders with better benefits and affordable prices, and avoid paying unnecessary fees and working with brokers that mark-up rates.

A “rate-markup” started as a dealership tactic, where the dealer offers you a higher interest rate than you qualify for, and they pocket the difference. This is why approximately 91% of Americans are overpaying on their auto loans. An example to illustrate the concept, would be a lender willing to give a buyer a 1% APR, but the dealer tacks on some points, and gives it to the buyer at 3% APR. Now the bank keeps 1% and the dealer keeps 2% of your interest fees.

What can you do about rate-markups? Oftentimes, the deal you got on the car is tied to the financing. There is no waiting period needed to refinance a vehicle either, so you can take the best option they give you, and then shop around as soon as that new loan is active. Modern auto refinance is so simple, it can often be done online or from your phone with the right companies. Alternatively, you can try to secure your own financing before you buy your car, but you may lose some negotiating power, and be prepared for the dealership to intentionally make using your own
financing a hassle.

When Should You Refinance Your Car?

You can refinance your auto loan as soon as the original loan is active, so usually a week after you buy the vehicle. Now that you know about rate-markups, you should apply for a refi as soon as you buy. Let’s talk about the credit pulls here too. When you have a credit pull, you may or may not see a drop in your credit score. If you are deemed to have “too many inquiries” by the credit bureau, you can see an average drop of 2-5 points. If it were to drop at all, know that it is temporary. When you consider the average dollar savings for auto refinance is in the thousands,
you have to do what is best for you. Since your credit score is a tool used to make sure you get the best financing offers, and save the most money possible, this is generally a logical use of a credit pull for most Americans with so much money on the line.

Refinancing your car comes with many benefits. There’s a chance you’ll get a lower interest rate, decreased monthly payments, as well as the option to customize your loan term. Although, lenders will not help refinance a loan for your car if it is older than ten years, and vehicles with more than 100,000 miles can be harder to get approved. This is why it’s recommended to refinance your car sooner rather than later.

You also need to consider that the amount of money you’re applying for must be within your lender’s limit. This limit depends on the lender you go through. Most lenders have a minimum loan requirement of $10,000, and the maximums can vary.

Choosing a Refinance Lender

Once you confirm your current lender will not refi your current loan, it can be time consuming to find the right combination of approval guidelines and low rates if you shop individual lenders on your own. You have to talk to many people and submit many apps before you find the right offer. Realistically, very few people are willing to spend the time, and just take a slightly lower offer, resulting in them continuing to overpay.

Alternatively, there are many refinance brokers that can help you shop with an entire network of lenders, but many have expensive or hidden fees, and many can mark up your rates again, putting you back in the same position as you started. One of the simplest things you can do to compare offers and avoid hidden fees, is to multiply the number of months by the amount of
your payment for your new offers. The result is the total amount of principal and interest you will ultimately pay. In the below examples, you can see the longest term also has the lowest total payback, in addition to the lowest monthly payment, so you save more monthly and overall, even though you paid longer. The lower interest rate allowed you to pay less for a longer period of time. Remember, without interest for a 60 month loan, you would only pay $500 a month, so the rest of the payments are made up of interest payments.

Examples Using a $30,000 Loan Balance:

  • The original loan has a payment of $566.14, over 60 months (5% interest) = Total Payback of $33,968.40
  • The new loan option #1 has a payment of $493.64, over 66 months (3% interest) = Total Payback of $32,580.24
  • The new loan option #2 has a payment of $429.82, over 72 months (2.3% interest) = Total Payback of $32,236.50

Refinancing with Gravity Lending

At Gravity Lending, we help connect our customers with the lowest cost option for their auto refinance. We work with more than 100 top lenders around the U.S., we drive
exclusive rates from our lenders you can’t find anywhere else, and our team is committed to helping you find the best refinance options for your unique situation. We never charge you a fee for our service, and we never mark-up interest rates; we know you are shopping and we intend to deliver your best offer the first time; that is the Gravity Lending promise!

We are also proud to have earned the top reviews in our industry on all the major review sites, including Google, TrustPilot, Lending Tree, Consumer Affairs, and Better Business Bureau to name a few, and we continue to win awards for our culture and process. See why thousands of people each day choose to simplify the refi process and compare offers using Gravity Lending.