Can you refinance a car loan with the same lender?


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Refinancing your auto loan can be a useful tool in achieving a number of financial goals. But 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. Find out how refinancing works with the same lender and when it makes sense to explore elsewhere.


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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 samelender? 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. If your lender does offer refi 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.


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 refinancing a car. Here are some of the most common situations in which it makes sense to refinance. This may help give you an idea of when you might look at refinancing options to achieve specific goals.

  • 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. If your credit score isn’t very high, refinancing with a co-signer could also help you pay less in interest.
  • 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.
  • Your Car Is Aging and/or Has High Mileage: Many lenders restrict your ability to refinance a vehicle once it 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.

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. 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. 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. The lender will probably also check your credit, which can result in a small, temporary dip in your credit score. Then you’ll receive a loan offer based on your personal information and your vehicle information. The offer will 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 out there.

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. 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. 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). 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.


Again, the lender will probably check your credit. 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.


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. 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.

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.


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How often can you refinance your home?


Other than possible lender-imposed waiting periods after a mortgage loan closes, you can refi as many times as your heart desires. But you’ll want to crunch numbers and think about more than interest rates.


Homeowners choose to refinance for a number of reasons: to lower monthly payments, take advantage of lower interest rates, get better terms, pay the loan off more quickly, or eliminate private mortgage insurance.


Refinancing involves paying off the current mortgage with a second loan that has (hopefully) better terms. Borrowers don’t have to stay with the same lender—it’s possible to shop around for the best deals, and lenders will compete for that business.


Mortgage rates seem to be constantly in flux, moving mostly in parallel with the federal interest rate. Both were on a downward trend throughout 2020, and mortgage rates rang in the new year at 2.67% for a 30-year fixed loan and 2.17% for a 15-year fixed loan.


Rates that low could mean the chance for homeowners to save significant money. But should a killer interest rate automatically trigger a refinance? Here are some things to consider before taking the plunge.


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loans vs personal loans for home improvement


Eugene Zvonkov / istockphoto


Because a homeowner who refinances is essentially taking out a new loan, the cost of acquiring the new loan must be compared with potential savings. It could take years to recoup the cost of refinancing.


As with the initial mortgage loan, a refinance requires a number of steps, including credit checks, underwriting, and possibly an appraisal.


Typically, however, many homeowners start with an online search for the rates they qualify for. (A low average mortgage rate doesn’t necessarily translate to an individual offer—creditworthiness, debt-to-income ratio, income, and other factors similar to what’s required for an initial mortgage will matter.)


The secret sauce that makes up a mortgage refinance rate might seem like a mystery right up there with how car sellers price their inventory, but there are some common factors that can affect your offer:


Gerasimov174 / istockphoto


As a general rule, higher credit scores translate to lower interest rates. A number of financial institutions will give account holders access to their credit scores for free, and a number of independent sites offer a free peek, too.


Is the loan a 30-year fixed? A 15-year? Variable rate? The selected loan repayment terms are likely to affect the interest rate.




A refinance doesn’t typically require cash upfront, as a first-time mortgage usually does, but any cash that can be put toward the value of a loan can help reduce payments.


FabioBalbi / istockphoto


If a home loan is extra large (or extra small), interest rates could be higher. But generally speaking, the less the mortgage amount is compared with the value of the home, the lower the interest rates may be.


Some refinance offers come with the option to take “points” in exchange for a lower interest rate. In simplest terms, points are discounts in the form of a fee that’s paid upfront in exchange for a lower interest rate.


Where the property is physically located matters not only in its value but in the interest rate you might receive.


As with first-time home loans, consumers have a number of refinance mortgage options available to them. The two most common types involve either changing the terms of the original loan or taking out cash based on the home’s equity.


A rate-and-term refinance changes the interest rate, repayment term, or sometimes both at once. Homeowners might seek out this type of refinance loan when there’s a drop in interest rates, and it could save them money for both the short term and the life of the loan.


A cash-out refinance can also change the terms or interest rate, but it includes cash back to the homeowner based on the home’s equity.


Within those two basic types of refinance options, conventional mortgages from traditional lenders are the most common. But refinancing can also happen through a number of government programs.


Some, like USDA-backed loans, require the initial mortgage to be a part of the program as well, but others, such as the VA, have a VA-to-VA refinance loan called an interest rate reduction refinance loan and a non-VA loan to a VA-backed refinance, so it’s important to shop around to find the best option.




If a home purchase comes with immediate equity—it was purchased as a foreclosure or short sale, for example—the temptation to cash out immediately with a refinance may be strong.


The same could be true if interest rates fall dramatically soon after the ink is dry on a mortgage. Especially for conventional loans that are backed by Fannie Mae or Freddie Mac, it may be possible to refinance right away. Others may require a waiting period.


According to credit-reporting company Experian, for example, there can be a six-month waiting period for a cash-out refinance. Or refinancing via government programs like the FHA streamline refinance or VA’s interest rate reduction refinance loan can require waiting periods of 210 days.


Lenders can require a waiting period (also called a “seasoning period”) until they refinance their own loans for a number of reasons, including insurance that the original loan is in good standing.


For a cash-out refinance, some lenders may also require that the home has at least 20% equity.




As with other things in life, just because you can (refi) doesn’t necessarily mean you should. Before you jump on the refinance bandwagon, ask yourself these questions.





The endgame of a mortgage refinance can help determine whether now is the right time. If a lower monthly payment is the goal, it can be wise to play around with a refinance calculator to see just how much a lower interest rate will help.


For years, it has been a general rule that a refinance should lower the interest rate by at least 2 percentage points to be worth it. Some lenders believe 1 percentage point is still beneficial (each percentage point amounts to roughly $100 a month in payment reduction), but anything less than that and the savings could be eaten up by closing costs.


Ta Nu / istockphoto


It’s important to remember that a lower monthly payment—even if it’s significantly less—doesn’t necessarily equal savings in the long run.


If a mortgage with 20 years remaining is refinanced to lower the monthly payment, for example, the most affordable option could be a 30-year mortgage. But is the lower monthly payment worth it if it will be around for 10 additional years?




One of the biggest differences between a first-time mortgage and a refinance is the amount it costs to close the loan. Many times, closing costs for a refinance can be rolled into the loan, requiring no cash at the outset.


Closing costs typically come in at 2% to 5% of the loan amount, and although they can be rolled into the loan and paid off over time, that could mean the new monthly payment isn’t as low as planned.


One way to make sure the investment is worth the cost is to ask the lender for a break-even period.


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