Do you have a loan on your car? Are you thinking about a new auto loan refinancing or are you looking for current interest rate information? Check out today's best auto refinance interest rates to see available offers. Interest rates in the current market are increasing, but you can still find ways to refinance your vehicle using our best auto loan refinance tips. To follow this guide you must have an existing loan or be willing to refinance or ready to refinance your car in the future.
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Interest Rate, APR, and Vehicle Equity History
Interest rates for refinanced auto loans have been quite low historically but have been steadily increasing since the summer of 2022. Rate hikes are expected to continue into 2023 and onward for the mid-term future. Between 2018 and 2021, the interest rate for an auto refinance loan was around 3.5% with some rates for top-qualified car loan applicants as low as 1.99% APR. These record low APRs demonstrated how drivers could save on the total cost of their loan and in turn save money each month on their car payments since the APR included all of the loan's costs and fees. This meant your monthly payments, if you refinanced a car then, were usually less than you were paying under your old loan.
During the spring of 2022, the equity of many vehicles increased driven by consumer demand. This allowed many drivers to take advantage of their equity since they could enter into a more beneficial loan position if their car's value increases or your car is worth more before refinancing. The heightened equity paired with the lower interest rates when applied to drivers' current paid down loans allowed them to repackage their vehicle debt into a smaller monthly payment in the summer of 2022.
It was also a good time to buy a new car in 2021 and 2022 as well. Many new car owners also bought vehicles then thanks to the cash inflows from the stimulus checks and Economic Impact Payments. Not only were trade-in values increased so owners saw increased amounts for their old cars as they swapped their vehicles for newer ones to drive in style, but they also picked up new car loans with some of the best auto loan rates on the market then. However, the auto loan situation changed rapidly in summer and fall of 2022 due to increasing inflation and rate hikes by the Federal Reserve.
About Current Rates
New and Used Car Loan Rates
Bracket Category | Credit Score Range*** | New Car Loan Rate*** | Used Car Loan Rate*** |
---|---|---|---|
Super Prime | 781 to 850 | 2.96% (0.57% YoY) | 3.68% (0.33% YoY) |
Prime | 661 to 780 | 4.03% (0.45% YoY) | 5.53% (0.26% YoY) |
Nonprime | 601 to 660 | 6.57% (-0.14% YoY) | 10.33% (-0.01% YoY) |
Subprime | 501 to 600 | 9.75% (-1.19% YoY) | 16.85% (-0.48% YoY) |
Deep Subprime | 300 to 500 | 12.83% (-1.65% YoY) | 20.43% (-0.29% YoY) |
*** Credit score brackets and data comes from Experian's State of the Automotive Finance Market Q2 2022 but is not endorsed or certified by Experian.
Current Rates
A description of the current average interest rates for auto refinancing.
Car refinance rates are increasing if we take a look global position of interest rates offered by credit union and bank lenders today. According to the table above by Experian's State of the Automotive Finance Market report for 2022 Q2, we can see that used car loans are up 0.33% with average rates for Super Prime customers at 3.68%. The year-over-year, or YoY, gains are representative of the market conditions because lender requirements are also increasing for 2022. This means that customers which higher credit scores are more likely to be offered lines of credit while customers which lower credit are more likely to be denied. This inherently means fewer Subprime and Deep Subprime borrowers can enter the market under these conditions.
When taking into account the average loan terms, we can see most terms are 60 months or more which means this term also applies to the current average interest rates for an auto loan. Therefore with excellent credit, you could expect offers to be around 3.7 percent for used loans and 3 percent for new loans with a term of 60 months. If you have a credit score of 700 or higher, you may be eligible to refinance a car loan with these rates! The current average interest rates are workable, so if you're looking to save on your car payments, now is the time to get into an auto refinance deal.
What are auto refinance interest rates?
When it comes to borrowing money, interest rates are important. But what exactly is an interest rate? A basic interest rate is the percentage of a loan amount that is charged as interest. Auto refinance interest rates are defined as the amount of interest that you pay to the lender by refinancing your car loan with a new loan. You could think of it like a percentage fee you pay to the banks or credit unions to borrow their money.
Interest Rates Versus APR Rates
Interest rates are different from APR rates. The higher the interest rate, the more expensive the loan's APR will be. APR, or annual percentage rate, is the total cost of a loan, including the interest rate and any other fees. For example, let's say you take out a $17,000 loan with a 10% interest rate. This means you'll owe $1,700 in interest after one year with potential fees added on top which may cause the APR to be higher at around 11% or 12%. However, if the APR is 10% on the same loan, that means you'll owe $1,700 in interest and fees after one year with the interest rate being lower than 10%. Interest rates and APRs can vary depending on the type of loan you get and how they are calculated.

How Are Car Loan Interest Rates Calculated?
A car loan is an arrangement between a borrower and lender where the borrower agrees to repay the loan in full or in part with monthly payments at a certain interest rate. The interest rates on car loans can vary depending on your credit score. The higher your credit score, the lower interest rates you'll be charged. The lender will check your credit report using both soft credit pulls and hard credit pulls at different points in the process to make sure you are eligible for the line of credit. The interest rates you see as loan offers are calculated by taking into account how long it will take you to pay off the vehicle's cost as well as how much it costs per month for things like insurance, lender risk, fees, and taxes. The points below shows a breakdown of car loan interest rates by their variable and fixed features which affect the lifetime of your loan differently.
Fixed Rates
These interest rates are most often found in the car loan market. Fixed interest rates stay static throughout the life of the loan because there are not any additional fees or charges from the lender.
Variable Rates
A variable rate means that the cost of borrowing can fluctuate with changes in market and lending conditions. This type of rate often changes over time rather than remaining constant throughout the life of your loan like fixed rates do.
Factors that Affect Rates
A discussion of the different factors that can affect auto refinance interest rates such as credit score and loan term.
A lot of factors affect auto refinance interest rates. These factors can vary greatly depending on the person, such as credit score, loan term, vehicle equity, repayment history, and current outstanding liabilities. So, here are some of the most common factors that can affect rates: Loan term, credit score, total monthly payments from all liabilities, residual value, age of car, and car's mileage. Other factors may come into play like if you have ever missed a payment, the year you bought your vehicle, or the number of years you've paid into your current vehicle loan.
Credit Score Requirements for Auto Loans
Today, it's more common to finance your car through an auto loan than to purchase it with cash. To get the best interest rates on your loan, you need a good credit score. Credit scores are measured in brackets with higher being better. One way to improve your credit score is by being consistent in paying off your current debts and financial obligations like mortgages or credit cards and personal loans since all of these things are tracked in your credit history. Getting a car refinance and making consistent payments on time also helps your credit score. When you refinance, check to see if your credit score has changed since you purchased your car. It is much easier for you to get a great interest rate on your new loan if you have excellent credit or your credit score has improved. There is also a minimum credit score for most lenders, so make sure you are within their applicant range.
Bracket Category | Credit Score Range*** |
---|---|
Super Prime | 781 to 850 |
Prime | 661 to 780 |
Nonprime | 601 to 660 |
Subprime | 501 to 600 |
Deep Subprime | 300 to 500 |
*** Credit score brackets and data comes from Experian's State of the Automotive Finance Market Q2 2022 but is not endorsed or certified by Experian.
As you can see, the best rates are reserved for low risk customers with high scores. Customers with poor credit can face increased rates, so take into account the impact of your credit and try to improve your score as best you can.
How Loan Terms Affect Interest Rates
Loan terms can affect the interest rates. A loan term is how long you have to return the money to the lender and is often measured in a number of months like 36, 48, 60, 72, or 84. A shorter term of 36 or 48 months can often hold the lowest and most beneficial interest rates, but the tradeoff comes in the form of higher monthly payments since refinancing may increase your payment. In 2022 Q2 per the Experian data, used car loans were usually around 3.68% for Prime customers to 5.53% for Super Prime customers. This is because there is less time to pay back the borrowed amount. Interest rates usually increase as the term rises for taking on a 48 month term would yield a better interest rate than a 84 month term.
When it comes to refinancing, we can take a look at the top rates offered by the best auto refinance companies. This allows you to compare auto loan refinance rates. Caribou, for example, offers a 2.32% APR for qualified borrowers with excellent credit scores and terms of 36 months. Auto Approve showcases a 2.25% new interest rate for 730 credit score borrowers with a longer loan term of 72 months for newer vehicles, with an APR which will be higher when factoring in all of the fees. Finally, RateGenius has available rates starting at 2.99%. It would be good to check with these companies when deciding when to refinance and which company to choose. They are also auto refinance lender marketplaces so all of the above provide access to many different banks and CUs like Bank of America, Sunlight Federal Credit Union, Consumers Credit Union, and PenFed Credit Union.
Remember the two biggest factors affecting interest rates are the size of the loan and how long you plan on keeping your car used as collateral for the loan before selling it. When you get an auto loan, you have the option to refinance. It is the same concept as a mortgage on your house. This means that if your car loan doesn't work out for your current budget or financial plan and you want to refinance, you can change your loan's term and interest rate. You may also be able to change car loans and use the equity as a form of leveraged collateral to take out a new loan. Some lenders also offer cash back refinancing so you could also extract money from the equity if needed.
How to Get the Best Rate
Tips on how to get the best interest rate when refinancing an auto loan.
There are a variety of different ways for car owners to get the rate while looking to refinance your auto loan. With all of the rate offers, the lender provides a new offer to refinance your current car loan and buys out your old car loan. Shopping for the best rate can save you thousands over the course of years and make a significant impact on your overall finances. To find the best rate, it often helps to compare interest rates from at least three lenders. You want to ensure that you're getting the best deal possible and qualifying for the lowest rate!
Calculate Your Refi Payment
When you're ready to calculate your refinance payment, there are a few things you'll need to know. First, you'll need to know the value of your original loan (this is your existing auto loan). You can find this by looking up your current auto loan with your existing lender. Once you have your loan's value, you'll need to subtract any outstanding loan payments or other pending payments en route from the total. Waiting a few days for payments to process can also help.
The next step is to calculate your new loan amount. To do this, you'll need to estimate your new loan debt or enter a current loan offer you've received from a lender. Once you have your new loan amount, you can use an auto refinance calculator to estimate your monthly payments. Be sure to compare different lenders and apply for an auto refinance with several lenders before choosing one for your refinance loan. You can often see competitive rates across lenders with no impact on your credit score. This is because they require a hard credit pull (also called a hard credit inquiry) during the final approval steps which would impact your credit score later.
Summing Up Interest Rates
So, within the current market we can see that rates are going up, but they don't have to exclude you from the market or be the end of the refinancing journey for you! Check with lenders to see today's best auto refinance interest rates, and how you can take advantage of a lower interest rate by refinancing your car. The difference between your current interest rate and what you can get on an auto refinance could still be beneficial. The difference in APR rates may save you some serious cash!

Best Auto Refinance Rate FAQs
Have questions about interest rates and the best rates available? Get APR and interest rate answers.
An auto refinance interest rate is the rate at which you can borrow money from a lender such as a credit union, bank, or other financial institution when you take out a loan through them. Interest rate is different than APR which is the total cost of the loan including fees.
APR is a more complete representation of the loan's cost versus interest rate. The APR associated with a car loan is percentage which includes the interest rate and other fees like origination costs.
The best car loan refinance rate for a used car is around 3.68% for the summer and fall of 2022 for customers with excellent credit histories.
Lenders calculate interest rates by taking their Federal Funds rate and adding on their own rate to create the Prime Rate. This is the base rate offered by the bank or credit union. Then, the lender adjusts offered rates to you as a customer based on your credit profile, loan term, vehicle equity, payment history, and other factors.
Interest rates may drop when the Federal Reserve lower the basis points. In the fall of 2022, the Federal Funds rate was 2.50 and is expected to go as high as 3.0 during 2023.
If you cannot decrease your interest rate by refinancing, you may be better off keeping your current loan for the time being. Your next steps include waiting for rates to decrease or selling the car if you cannot afford the current loan payment.