Talk to our team to start saving 800.260.5355
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Auto Refinancing During COVID


Coronavirus has changed nearly every aspect of our lives and auto refinancing during COVID is no different.  The pandemic affects how we work, how we play, where we go, and how we get there.  It has affected budgets, schedules, and expectations.  When adapting to the new reality, it’s important to find ways to be in control and to make choices that provide realistic yet attractive options.

As you evaluate how to obtain and pay for the things you need, this may be a good time to consider refinancing your auto loan.  This can be a great strategy to positively affect your budget and your overall financial stability.  There are some aspects of getting a new refinanced auto loan that hasn’t changed due to the pandemic.  Other’s have.

What Has Not Changed To Auto Refinancing During COVID

Refinancing an auto loan still involves evaluating your financial stability, credit history, and vehicle value.  The process typically involves completing an application and submitting it to one or more lenders, who will evaluate the application information along with your credit report to make their credit decision.  The lender also sets the interest rate and terms of the loan according to their assessment of the risk associated with the new loan.  Lenders typically consider factors such as the following, in addition to your credit score:

  • Loan to Value: how much you need to pay off your old loan versus the value of your vehicle
  • Payment to Income: the ratio of the new auto loan payment to your monthly income
  • Debt to Income: the ratio of your monthly debt obligations (such as credit card minimum payments) to your monthly income
  • Some lenders evaluate additional risk factors, such as:
  • Time on current job
  • Payment history on the current loan
  • Residence history
  • Derogatory credit, such as past-due payments, repossessions, and bankruptcy history

Learn more about auto refinance eligibility and terms in our glossary.

Has Your Financial Situation Has Changed During the Pandemic?

Even if your income is lower, your debit is higher, and your credit score isn’t as strong as it was before the pandemic, it’s ok.  There could still be options to help you lower your monthly payment and make other valuable changes to your loan structure.  If your credit and income are still strong, you might be pleasantly surprised at how much you can lower your interest rate and/or monthly payment.

You can either shop around online with multiple potential lenders or contact a refinance program, such as RefiJet, that works with multiple lenders nationwide to evaluate your application against various lending programs to find the best option for you.  The good news is that in many cases, you can complete the application process by phone or online instead of having in-person meetings.

There are more Benefits to Auto Refinancing Benefits Than Just Reducing Your Monthly Payment

Most people think of refinancing as a way to reduce their monthly loan payment amount.  Refinancing IS a great option to save money each month.  Additional aspects of refinancing can help you manage your budget and minimize the overall cost of owning and maintaining a vehicle in other ways.  Pushing out the first payment on your new loan for up to 90 days after the contract date can help keep money in your pocket when you need it most.  Adding products like GAP and Extended Service Contract helps you predict and minimize out-of-pocket expenses.  They limit what you will owe in the event your vehicle gets totaled and you owe more than it’s worth or if you have a mechanical breakdown.

Take Advantage of Low Auto Refinance Rates

While many of the aspects of being considered for a new loan haven’t changed, some of the lender’s specific criteria have.  Some are working in your favor, such as the current low-interest rates.  Federal interest rates have dropped.  Lenders are also competing for business in refinancing since the volume of new car loans has dropped significantly during the pandemic.  This competitive pressure can make refinancing now a great strategy for the consumer.  This also means that more lenders are offering to refinance loans with lower rates, providing you with more opportunities.

On the Flip Side, the Lenders’ Criteria Are Getting Tighter

For example, because so many people have been furloughed or laid off, you might need to provide proof of current employment, not just proof of past income level.  Unemployment or pandemic payments likely won’t qualify as income, so make sure you have another source of income or a co-borrower whose income will qualify if you are currently unemployed.  Some lenders are also imposing stricter requirements on vehicles, such as limiting the age or mileage.  Shortening the allowable term or reducing the maximum amount they will lend are other measures lenders may take to reduce their risk.

Despite some of these stricter loan structure requirements, however, refinancing could still be a great option to lower your interest rate and/or APR.  A little investigation can help you determine if you can dramatically lower your monthly payment or save money overall over the life of the loan.

How To Make Auto Refinancing Fast and Beneficial as Possible

Start with the following steps:

  • Research your options to identify the best way to refinance. Check online reviews, talk to friends, or search online.  Look for a refinance partner that will walk you through all the steps, provide various options, and explain those options.  They should ensure you can make informed decisions.  Ideally, they will help you with the more challenging aspects of refinancing, such as handling the paperwork during a Pandemic, as well.
  • Gather your documents. Most likely, you will need your driver’s license, registration, proof of income (such as a recent paystub if you are a W-2 employee), and a copy of your insurance card.  You might also need a copy of your insurance declaration page, showing your deductibles.  Document requirements can vary depending on the lender and your specific situation.
  • If you are in a title-holding state, obtain a copy of your vehicle title in advance to help speed things up, especially since state offices could be moving even more slowly than usual.
  • Check your ID and vehicle registration to make sure they will be valid for at least 30 days after the refinance. In some states or for some lenders, they might need to be valid for over 30 days.  If they are about to expire, start the process of renewing them before or just as you initiate the refinance.
  • Get the full name, address, and phone numbers of 2-3 people who could serve as references, if needed.
  • Find out if your state requires any documents to be notarized. You can ask the partner you have chosen for refinance or research online.  If a notary will be needed, finding one that will do it virtually, come to your home, or provide a socially-distanced option will help keep the process moving quickly and safely.

An additional factor that may have changed, depending on how your state handles titles, is that you might need to find a virtual notary or a notary service to complete paperwork that needs to be notarized.  This will help you avoid having to leave the house to handle the paperwork.  In some cases depending on the level to which state offices and the businesses are operational, getting some documentation may take longer, too.  As you evaluate your refinance options, make sure to talk with our lender or lending program to make sure they will help you with—or handle—some of these logistical challenges.

Explore Ways to Keep Your Car Loan Affordable

Evaluating your refinance options puts you in the driver’s seat with the cost of owning your vehicle.  Knowing what to expect, having the appropriate documentation ready, and selecting a pro-active, supportive refinance partner can make the process fast, easy, and productive—in most cases without leaving home!

Refinancing during a pandemic doesn’t have to be any more difficult than doing it any other time, but if you qualify, the results can make a very positive difference in your budget.  Get Started Now to see if you could benefit from a lower rate or lower monthly payment.

Back to All Articles

Helpful Articles

Vehicle Titles

The vehicle title is the legal document that is the state’s record of who owns the vehicle.

Reasons to Refinance Your Auto Loan

There are many reasons for refinancing your auto loan.  Auto refinancing can save you money on your monthly payment and thousands of dollars over the course of your car’s loan.

Pre-qualify Auto Refinance

Find out if you can save on your auto loan without impacting your credit