Key takeaways
- Refinancing a car typically takes one to two weeks but can take longer due to loan payoff and title transfer.
- The ideal time to refinance is when interest rates drop or your credit score increases.
- Refinancing a car might reduce your interest rate or payments.
Refinancing might lower your monthly payment or save you money on interest, making it a popular choice for car owners. The process typically takes one or two weeks, but the timeline depends on the lender and state processing.
To avoid delays, provide the required information and seeklenders offering direct payoff.
How long does auto refinancing take?
The general timeline for auto refinancing is one to two weeks. However, some parts of the process might take longer than others.
For example, you can often apply online and receive a decision in a few minutes. Receiving a loan decision might take longer if you apply in person at a bank branch.
Other parts of the refinancing process—such as paying off your loan and transferring your title—typically take more time. Paying off your loan might take five to 15 business days, while transferring a title can take two to eight weeks.
If there are no delays in the title transfer process, refinancing can be complete within two weeks.
What can delay the car refinancing process?
Delays in the auto refinancing process might result from slow lien releases, state processing times, missing documentation or failure to respond to lender requests.
- Slow lien releases: The old lender must release the lien on the vehicle before you can refinance. Some lenders take longer to process the loan payoff and release the lien.
- State processing times: Some states process title transfers digitally, while others use slower paper transfers.
- Missing documentation: You typically need several documents when refinancing, and failing to provide them can delay the process.
- Failure to respond to lender requests: The lender might need additional information during the refinancing process. Respond promptly to avoid delays.
Tips for expediting your car refinancing process
If you want to expedite the refinancing process, these are the steps you generally take.
Check your credit score
“Consumers should check their credit score first and be realistic about their credit profile,” says Bobbi Rebell, CFP and consumer finance expert at CardRates.com. Many credit card companies and other lenders let you check your credit score for free.
Gather required documents
When refinancing a car, you typically need your registration, loan information, driver’s license and proof of address. The more documentation you have when you apply, the better.
Research and compare lenders
Research lenders offering auto refinancing. Look for those with the best refinancing rates and repayment terms matching your preference. For example, if you want to repay your new loan in four years, seek lenders offering that term.Also consider fees. You might pay application, title transfer or registration fees. Additionally, you might pay a prepayment penalty to your old lender.
Although refinancing can save you money, it might cost more if you extend your repayment term. “Lenders often benefit from longer loans due to increased total interest paid,” Rebell explains. “The true red flag in refinancing is not the fees, which are generally low, but the risk of extending the loan term for a depreciating asset.”
Prequalify and submit your application
Many lenders offer prequalification, providing estimated interest rates and repayment terms before you formally apply. You can often prequalify online, which usually doesn’t affect your credit. However, prequalification is not an offer of credit, and final rates might be higher. If the loan offer you receive is suitable, move forward with a formal application. A formal application usually results in a hard inquiry, which can cause a small, temporary drop in your credit score.
Be ready to provide additional information
The lender might need more information about your vehicle or loan. Watch for such requests, as responding promptly helps speed up the process.
Inquire about direct payoff
Ask the lender if it offers direct payoff, meaning it pays off your loan. This can save you time and simplify the process, as lenders offering direct payoff likely know what is required.
When is an ideal time to refinance your car?
Refinancing often makes the most sense in these situations:
- Interest rates have dropped: When market interest rates drop, you might qualify for a lower auto loan rate. Refinancing after an interest rate drop might save you money.
- Your credit score has improved: A higher credit score means less risk for lenders. This might result in a lower interest rate when you refinance.
- You’re experiencing financial hardship: If you struggle with your auto loan, refinancing might lower your monthly payment.
- Enough time has passed: You might have to wait 60 to 90 days to refinance your original loan, allowing enough time for the title transfer. Additionally, waiting six months to a year can help you improve your credit and qualify for a lower rate.
Although waiting at least six months might help you get better rates, Rebell cautions against refinancing near the end of a loan term. “Unlike a home, a car is a depreciating asset, and extending the loan duration means paying even more for the car,” Rebell says.
The takeaway
Refinancing a car might reduce your monthly payment and save you money on interest. The process is typically complete in one to two weeks. However, it might take longer depending on lender, state and documentation considerations.
The best time to refinance is when interest rates have dropped or your credit score has increased. To avoid delays in the process, submit the required documentation and promptly respond to lender requests.
