Requirements for Auto Loan Refinancing

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - February 9, 2018

Refinancing an auto loan is a great way to save money and lower the interest rate. But, be aware that there are specific requirements that need to be met for a borrower to qualify to refinance a car loan.

Requirements for Auto Refinancing

Refinancing means a borrower is replacing their current loan with a new one. This is a good option for borrowers who received a high interest rate or are struggling with their monthly payment, but have taken the time to establish a good payment history.

Although there isn’t a set amount of time that needs to pass before a borrower can qualify for refinancing, there are five important factors to consider before starting the process:

  • Credit – A borrower will need to have either improved their credit since taking out the loan or already have good credit to refinance.
  • Vehicle type – Borrowers need to make sure the vehicle they want to refinance is eligible. Lenders may have age and mileage restrictions on the cars they’re willing to refinance, and they generally won’t refinance a vehicle with a salvage or rebuilt title.
  • Equity – Generally speaking, lenders don’t like to finance negative equity. It usually isn't possible to qualify for refinancing if a borrower is upside down in their current loan.
  • Loan status – A borrower must be up-to-date on their loan payments.
  • Loan balance – The amount someone wants to refinance must meet the lender’s balance minimum and limit range for refinancing, which will vary.

Ready for a New Loan?

Refinancing is a great way to get a lower interest rate or lower monthly payment. If you’re ready to refinance, our online refinancing tool with RateGenius may be able to get you started.

But, if you find yourself dealing with credit issues and are looking for a car loan, CarsDirect wants to help. We're partnered with a nationwide network of car dealers who know how to work with consumers in unique credit situations. Let us connect you to a dealer in your area. Get the process started by filling out our free and secure auto loan request form today.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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