How to Refinance a Used Vehicle

By Valencia Higuera

  • Overview

    Because of cars' depreciation, some owners never consider a refinance. But if you're looking to lower your payments or perhaps obtain a better interest rate, a refi can help. It's best to refinance newer vehicles because they retain some of their original value. With used vehicles, you have to worry about upside-down financing, in which you owe more than the vehicle's worth. Still, it's possible to refinance a used vehicle. The key is finding a good refi lender and considering all your options.
    • Step 1

      Evaluate your purpose. In other words, why do you want to refinance the used vehicle? Good reasons include extending the loan term or obtaining a reduced rate, which can lower monthly payments. Then again, some owners want to pay off their balance sooner, and they choose to accelerate their loan term.
    • Step 2

      Research the car's estimated worth. Unfortunately, auto lenders won't refinance a used vehicle if you owe more than the used car's value. To obtain a refi in this situation, you'll have to pay the difference out-of-pocket, which can equal thousands of dollars. Contact your lender and ask about your balance. Next, find your car's worth in Kelley's Blue Book ( If you owe less than the car's value, you're eligible for a refinance.

    • Step 3

      Get your free credit report. Individuals with poor credit or a horrible payment history do not receive the best interest rates. Before applying for a refinance, order your credit report. Websites such as offer free yearly reports. Learn your credit rating, and if necessary, make improvements. Limiting crediting inquiries, reducing your total debts and paying your bills on time increases a low score.
    • Step 4

      Obtain free loan quotes. Comparison shopping is vital, and this is the only way to guarantee the best refinance rate on a used vehicle. Using a broker, you can obtain free quotes in less than an hour. Quotes pre-qualify applicants and they feature an estimated interest rate, loan term and monthly payment.
    • Step 5

      Choose a quote and complete the loan application. Once you've carefully reviewed all loan offers, make a selection and submit an official application with the chosen lender. At this time, the auto lender pulls your credit report, verifies income and determines whether your vehicle is eligible for a refinance. Afterwards, schedule a loan closing and sign the new loan documents.
    • Skill: Moderate
    • Ingredients:
    • Auto lender
    • Credit report

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