Refinance Car Loan Rates: How to Compare and Get the Best Deal
If you’re paying too much for your current auto loan, refinancing could save you money.
By securing a lower interest rate or better terms, you can reduce your monthly payments and the total cost of your loan. In 2025, with rising competition among lenders, comparing refinance car loan rates is more important than ever.
What Factors Affect Refinance Car Loan Rates?
Several factors determine the interest rate you’ll receive when refinancing:
- Credit score – higher scores usually qualify for lower rates.
- Loan term – shorter terms often have lower rates but higher monthly payments.
- Vehicle age and mileage – newer cars tend to qualify for better rates.
- Lender type – banks, credit unions, and online lenders may offer different rates.
- Market conditions – overall interest rate trends affect auto loan pricing.
Understanding these factors can help you plan before applying.
Average Auto Loan Refinance Rates in 2025
In early 2025, refinance rates for auto loans typically range between 5% and 9% APR, depending on credit score and loan term. Borrowers with excellent credit may secure rates below 5%, while those with poor credit could face rates closer to 12% or higher.
Always request a personalized quote, as averages can vary significantly by lender.
Fixed vs Variable Car Loan Rates: Which One Is Better?
- Fixed rates: Stay the same throughout the loan term, providing stability and predictability.
- Variable rates: Fluctuate based on market indexes, sometimes starting lower but carrying the risk of future increases.
For most borrowers, fixed rates are safer—especially if you plan to keep the vehicle for many years. Variable rates may suit short-term borrowers who expect to pay off the loan quickly.
How Your Credit Score Impacts Car Loan Refinance Rates
Your credit score is one of the most important factors lenders use when setting refinance rates:
- Excellent (740+): Best rates, lowest monthly payments.
- Good (680–739): Competitive, but slightly higher rates.
- Fair (600–679): Higher rates and stricter approval requirements.
- Poor (below 600): Limited options, often with double-digit APRs.
Improving your credit—even slightly—before refinancing can save hundreds or even thousands over the life of your loan.
Best Practices to Lower Your Interest Rate Before Applying
To increase your chances of securing a better refinance rate:
- Check and improve your credit score by paying down debts.
- Shop around and compare offers from at least three lenders.
- Choose a shorter term if you can afford higher payments.
- Consider a co-signer with stronger credit.
- Time your application when overall interest rates are stable or trending lower.
Preparation makes a big difference in the rate you’re offered.
Where to Check and Compare Refinance Car Loan Rates
You can compare refinance offers through:
- Bankrate – provides updated averages and lender comparisons.
- NerdWallet – lets you filter by credit score and loan type.
- Credit unions – often provide lower rates to members.
- Online lenders – fast applications with competitive digital-first rates.
- Your current lender – some may offer better terms to retain your business.
Always gather multiple quotes before deciding to refinance.
Conclusion
Refinancing your car loan in 2025 can be a smart way to save money, but only if you secure the right rate. By understanding what affects refinance car loan rates, comparing lenders, and improving your credit before applying, you can lock in a deal that reduces your financial burden.
👉 Next article: Refinance Car Loan Calculator: Estimate Your Savings Instantly