Rateworks auto loan refinance
February 15, 2024

Can I Refinance My Car with the Same Lender? Exploring Your Options

Get more insight into the feasibility and considerations of refinancing with the same lender.

Graphic of a car being refinanced
Written by

Sarah T.

The decision to refinance your car loan often comes with questions, and one common query is whether it's possible to refinance with the same lender. This blog post aims to clarify this topic, offering insights into the feasibility and considerations of refinancing with the same lender.

Understanding car loan refinancing 

When you refinance your car loan, you're essentially swapping out your existing auto loan for a new one. This new loan settles the debt of your original loan, and you then start making monthly payments toward the new loan. The process of applying for refinancing is generally quick and painless, with many lenders capable of making determinations promptly.

Common reasons for considering refinancing include:

  • Lowering your interest rate
  • Reducing your monthly payment
  • Trying to improve your credit score
  • Exploring loan offers for better terms
  • Changing car loan terms

Whether you're looking to save money on interest, adjust your monthly payments to fit your budget better, or simply seek more favorable loan terms, refinancing can be a strategic move to consider. Before deciding, weighing the potential benefits against any associated costs or implications is important.

Someone refinancing their car with the same lender

Is it possible to refinance with the same lender?

Yes, it is entirely possible to refinance your car with the same lender. In fact, doing so has certain benefits, particularly if you have a positive relationship with your current lender. Here are some advantages:

  • Established relationship: Working with your current lender means you already have a relationship with them. This familiarity can be beneficial when you have questions or need assistance navigating their payment processes. It also helps keep your financial dealings streamlined.
  • Lower fees: Refinancing with the same lender may often come with lower fees than switching to a new lender. Since you're already a customer, they may offer incentives or discounts to retain your business.

Factors that may influence a lender's decision to allow you to refinance include:

  • Credit score: Lenders typically consider your credit score when assessing your eligibility for refinancing. A higher credit score often increases your approval chances and may qualify you for better terms.
  • Payment history: Your track record of making timely payments on your current loan is essential. A history of on-time payments demonstrates your reliability as a borrower and may improve your chances of approval.
  • Debt-to-income ratio: Lenders will look at your debt-to-income ratio to determine your ability to manage additional debt. A lower ratio indicates that you have sufficient income to cover your existing debts and any new loan obligations.
  • Vehicle equity: The amount of equity you have in your vehicle may impact your lender's decision. If the value of your car exceeds the amount you owe on your loan, it may increase the likelihood of approval for refinancing.

By understanding these factors and maintaining a positive financial standing, you can increase your chances of successfully refinancing with your current lender.

Pros and cons of refinancing with the same lender

One option to explore when refinancing your car loan is sticking with your current lender. Before deciding, weighing the pros and cons of same lender refinancing and considering various factors is essential.

As of October 2023, the average car loan interest rate was around 9.00%. However, APRs can vary significantly based on factors such as credit score and loan type, ranging from 5.07% to 21.38%. These rates encompass not only the interest charged but also include fees and other associated costs.

Advantages of staying with the current lender

  • Streamlined process: Refinancing with the same lender can often streamline the process since they already have your information on file. This can lead to faster approval and fewer documentation requirements.
  • Potential for better terms: Your current lender may offer you better terms or incentives to keep your business, such as lower interest rates or waived fees.
  • Familiarity: You're already familiar with your current lender's policies, procedures, and customer service. This can make managing your loan more convenient and comfortable.

Potential drawbacks and limitations

  • Limited options: Sticking with the same lender may limit your ability to explore offers from other lenders that could potentially provide more favorable terms or lower rates.
  • Missed opportunities: By not shopping around and exploring other options, you may miss out on potential savings or better loan terms that could be available elsewhere.
  • Lack of negotiation: Since you're already a customer, your current lender may be less inclined to negotiate or offer competitive rates than new customers.

Before committing to refinancing with your current lender, carefully consider these factors and assess whether they align with your financial goals and needs. Remember that exploring all available options and conducting thorough research is crucial in securing the best possible terms for your car loan refinancing.

A car and key that has been refinanced

Considerations before refinancing with the same lender

While you may be inclined to refinance with your current lender due to its benefits, taking a step back and carefully considering certain factors before proceeding is a must. Here are some key considerations to keep in mind:

Reviewing existing loan terms

Before jumping into refinancing, reviewing your existing loan terms thoroughly is essential. Take note of your current interest rate, monthly payment amount, remaining loan balance, and any applicable fees or penalties for early repayment. Understanding these details will help you assess whether refinancing will truly benefit you in the long run.

Assessing changes in financial circumstances

Your financial situation may have evolved since you initially took out your car loan. Consider factors such as changes in income, employment status, credit score, and overall financial stability. These changes could impact your eligibility for refinancing and the terms you qualify for.

Exploring offers from other lenders

Even if you've decided to refinance with your current lender, take some time to do your due diligence and explore offers from other lenders. Shopping around allows you to compare rates, terms, and fees to ensure you get the best possible deal. Another lender can offer more competitive terms or lower rates, ultimately saving you money in the long term.

By carefully considering these factors and thoroughly evaluating your options, you can decide whether refinancing with your current lender is the right choice for your financial situation.

Person getting the keys to their newly refinanced car from the same lender

Steps to refinance with the same lender

Here's a step-by-step guide to help you navigate through refinancing with the same lender:

  1. Inquiring about available options

Begin by contacting your current lender to inquire about their refinancing options. Ask about any incentives or promotions they may offer for existing customers looking to refinance their auto loans. Additionally, inquire about the current interest rates and terms available for refinancing.

  1. Gathering necessary information

Before initiating the refinancing process with your current lender, you must ensure you have all the necessary information readily available. While your existing lender will have details on your current loan balance, interest rate, and loan term, it's wise to review your original loan agreement to confirm these specifics for yourself.

In addition to loan details, you'll need to gather various documents to support your refinancing application. These may include:

  • Proof of income: Prepare documents such as pay stubs, W-2 forms, tax returns, Social Security letters, or online employer income verification to demonstrate your ability to repay the loan.
  • Proof of residence: Provide documents, such as utility bills or lease agreements, to verify your current address.
  • Vehicle documentation: Have the vehicle's title, registration, and odometer photo ready for submission. Some lenders may also require proof of insurance, including an insurance card, and may specify a certain level of coverage.
  • Driver’s license: Ensure you have a valid driver’s license for identification purposes.

It's essential to check with your lender to confirm any specific documentation requirements they may have for the refinancing process. Some lenders may also require additional information, such as proof of a certain level of insurance coverage or changes to the lienholder on the vehicle title to reflect the new loan.

  1. Initiating the refinancing process

Once you've gathered all the required information, contact your lender to initiate the refinancing process. They will guide you through the necessary steps, including completing an application, undergoing a credit check, and providing additional documentation as needed.

  1. Reading the fine print

Before finalizing the refinancing agreement, carefully review all terms and conditions outlined in the loan documents. Pay close attention to factors such as the new interest rate, loan term, monthly payment amount, and any associated fees or penalties. Ensure that you fully understand the terms of your new loan and that you can comfortably manage them.

By following these steps and exercising diligence throughout the process, you can successfully refinance your car loan with your current lender while ensuring that the new terms align with your financial goals and capabilities.

Woman in her refinanced jeep

Exploring your refinancing options with RateWorks

Refinancing your car loan with the same lender is a possibility worth considering, but it's super important to weigh the pros and cons before proceeding. By understanding the process and evaluating your circumstances, you can make informed choices aligning with your financial goals. 

Remember to review your existing loan terms, gather necessary documentation, and explore offers from other lenders to ensure you're getting the best deal. If you're unsure about your options, consider experimenting with RateWorks' loan calculator to estimate potential savings. Make the most of your refinancing journey by taking proactive steps towards financial empowerment. You can contact RateWorks as well to learn more, or get a free quote here to get the process started.