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Can You Refinance a Car Loan With the Same Lender?

Can You Refinance a Car Loan With the Same Lender?
Lauren Ward
Lauren WardUpdated March 3, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
If you want to refinance your car, can you do it with the lender with whom you have your original loan? You probably can, but there’s more to the decision making process than just picking the lender who knows you best.If your lender does offer auto refinance loans, you still shouldn’t just assume your lender is the best option out there. Different lenders offer different rates, loan terms, and fees, so it’s important to shop around. Below we highlight how refinancing works with the same lender and when it makes sense to explore elsewhere.

Is It Possible to Refinance With the Same Lender?

If you’re thinking of refinancing, you may be wondering, Can I refinance my car with the same lender? In most cases, the answer is yes — but that doesn’t mean it’s automatically the right decision for you.When you first start thinking about refinancing your auto loan, it’s natural to consider your current lender, especially if you’ve had a positive experience. Not all auto lenders offer refinancing, though. Most do, but it’s a good idea to double check that this option is available before you do more digging.Can you refinance your auto loan with the same bank? Absolutely. Is it always the best loan offer available? Not necessarily. And you won’t know for sure unless you shop around.

When Does It Make Sense to Refinance?

There are many pros and cons involved in auto refinancing. Here are some of the most common situations in which it makes sense to refinance:

You Now Qualify for a Lower Interest Rate

If interest rates go down or your credit has improved, you could save money with a lower rate. Refinancing may be right for you if you qualify for an interest rate that’s lower than your current auto loan rate.

You Have a Helpful Cosigner

If your credit score isn’t very high, refinancing with a cosigner could also help you pay less in interest. Refinancing may be right for you if you have a creditworthy cosigner who can help you qualify for an auto refi loan that’s right for you.

You Want to Lower Your Monthly Payment

You might be able to get a longer loan term by refinancing. This means you’ll be making payments longer but also lowers your monthly bill. You may end up paying more in interest over the extended loan term, but refinancing may be right for you if you need a lower monthly payment to make ends meet.

Your Car Is Aging or Has High Mileage

Many lenders restrict your ability to refinance a car loan once the vehicle reaches a certain age or mileage mark. If your car is close to 10 years old or is approaching 100,000 miles, then it might be time to crunch the numbers to see if one last refinance makes sense. Refinancing a car with high mileage is possible and may be right for you depending on your personal circumstances.Recommended: Can Someone Take Over My Car Loan?

Is It Easier to Refinance With Your Current Lender?

When you apply to refinance your auto loan, you’ll need to submit documents related to your current loan, including the loan agreement. If you’re applying to refinance through your current lender, it will probably already have that paperwork on hand. But while it may seem easier to let your current lender handle this step on its own, you should still find and review that information yourself before you apply to refinance. That way you can check the contract for prepayment penalties and your exact payoff amount. It’s also important to check your current interest rate to figure out whether or not you’re getting a better offer with a refinance.Even if it does seem easier to refinance with a lender you’re already working with, it’s crucial to rate shop and make sure you’re meeting your financial goals. And if you find a better deal elsewhere, it may not be that much harder to switch. Most lenders create an easy, streamlined application process. In summary, it can be easier to get a refinancing loan from the lender you already know. But “easier” doesn’t automatically mean it’s better.

How to Refinance With the Same Lender

How exactly to refinance an auto loan may differ slightly when you’re applying with the same lender. Here are the steps on how you may refinance with the same lender:
  1. The first step is to gather the required documentation. Even if you have a history of making your car payments on time, you’ll still probably need to provide proof of income. This could be recent paystubs or a tax return.
  2. You may also need to confirm and update your personal information, including your address and how much you spend on housing each month. The lender likely has other details about your current loan and vehicle. Nonetheless, it will probably pull a credit report to see where you stand today. Your credit score may drop by a few points if the lender conducts a hard pull inquiry into your credit report.
  3. You may receive a loan offer based on your personal information and your vehicle information. The offer may include an interest rate, any fees, and the length of the loan term. Review all of these details and compare this offer to offers from other lenders to see which is the best option for you.

How to Refinance With a Different Lender

Even if you were interested in refinancing with your current car loan provider, you might find a better deal elsewhere and decide to change lenders. Here are the steps on how you may refinance with a different lender:
  1. For a new lender, you may need to bring a little more documentation to your application when applying. In addition to the financial and income verification you need to apply with your existing lender, a new lender will likely need information about your vehicle and current loan.
  2. The new lender will likely need details about your vehicle, including the make, model, and year. You must also disclose the vehicle’s mileage and supply the lender with the vehicle identification number (VIN).
  3. Additionally, you’ll probably be asked to supply the loan balance and lender’s contact information. The application may also require you to submit proof of auto insurance.
  4. The lender may check your credit report. This can result in a small, temporary drop in your credit score. But if there are multiple credit inquiries for the same kind of loan within a short period of time on your record, they’ll typically be counted as just one, since the credit score agencies understand that you’ve been shopping to find the best rates.
  5. Some lenders may allow you to prequalify for a loan, which won’t typically result in a credit drop. But note that the offers you see that way aren’t guaranteed, especially if your financial situation changes before you actually apply for the loan.
  6. Once you’ve selected the loan you want to apply for, the process will be similar to that when you apply with the same lender, except that when you’ve received and accepted the loan terms, your new lender will transfer the funds to pay off your old loan and your new payments will begin.
Recommended: How to Refinance an Auto Loan

The Takeaway

It is generally possible to refinance your auto loan with your current lender. It may even be a bit easier than filling out an application with a new lender. But it doesn’t mean that it’s financially the best option for you. The bottom line is that it might be worth it to shop around.Comparing auto loan refinancing offers is a lot easier when you can access multiple lenders in one place. Lantern by SoFi can help. Compare auto refinance rates by filling out one simple form to make sure you’re getting the loan that’s right for you.Compare auto loan refinance rates with Lantern.
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Frequently Asked Questions

Is it better to refinance with the current lender?
When does it make sense to refinance with the same lender?
When does it make sense to refinance with a different lender?
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About the Author

Lauren Ward

Lauren Ward

Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.
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