Auto Loan Refinancing in 2026: How to Save More This Year

Tired of your car payment draining your bank account each month? The car market experts at Kelley Blue Book estimate that auto loan rates could begin to fall in early 2026, making it a strong year for auto loan refinancing. Lower rates and greater lender flexibility can create savings opportunities that mean a lower monthly payment — and more money in your pocket. 

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If you’re curious about how refinancing works on a car loan, now is the perfect time to learn. We’ll show you what affects your interest rate, how to prepare for a refinance, and how to pick the right lender to help you meet your financial goals in 2026. 

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‍Key takeaways

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• Auto loan refinancing replaces your current car loan with an all-new loan with a different rate and terms.
• Refinancing your car loan can help you lower your monthly payment or pay less in total interest, which can help you reach other financial goals.
• If car loan rates fall as predicted, it would make 2026 a strong year for refinancing an auto loan.
• Your credit score and current interest rates are the most important factors to consider when deciding on the right time to refinance your car loan.

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‍What is car loan refinancing?

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When you refinance a car loan, you swap the old loan for a new loan with all-new terms. It’s a great way to get a new lender, a lower interest rate, a shorter repayment term, or a lower monthly payment, depending on your goals. 

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People use auto loan refinancing to pay off their debt faster, lower the total amount they pay in interest, or free up cash for other needs.

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How auto refinancing works

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The process of refinancing a car loan is very similar to getting a new car loan. Here’s what you’ll do:

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1. Check your current loan details. You’ll want to find your interest rate, monthly payment, payoff date, and remaining loan balance. Make sure you know your vehicle details, too, like the make, model, year.
2. Shop for loan offers. Look for lenders that offer auto loan refinancing and request a rate offer. Many banks, credit unions, and online lenders offer refinancing, so compare multiple offers to find the one with the best rate and terms for your situation.
3. Fill out the application. Once you decide on a lender, you’ll need to provide your personal information and documentation to verify your finances. The lender will usually run a hard inquiry on your credit report, too.
4. Sign your loan paperwork. Once you’re approved, the lender will send you the final loan documents for your signature. 
5. Pay off the old loan. Some lenders will pay your old lender directly. Others will give you the funds for you to pay off the loan yourself. Once your old loan is cleared, make sure you set up payments to your new lender. 

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‍Why interest rates and credit score matter

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If you haven’t checked your free annual credit report in a while, take a moment to do that now. Lenders use your credit history to determine the interest rate they give you for a car loan. If you’ve been paying your loan on time every month, that could be boosting your score. A higher score — say, 700 or higher — could help you qualify for a lower interest rate, saving you money.

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You could also receive a lower interest rate if market conditions have changed since you took out your car loan. For example, the average rate on a 60-month car loan was about 7.64% in August 2025, compared to 8.40% a year ago. A 72-month loan was even higher, at 8.70%. If auto loan rates continue to fall in 2026, you might be able to cut your car loan rate significantly. 

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‍Is it a good year to refinance a car loan?

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The best time to refinance is when you can get a lower interest rate, whether that’s because market conditions have changed or your credit score has improved. Keep an eye on auto loan rate changes during 2026. If rates come down to less than what you’re currently paying, it could be a great time to refinance.

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Periodically check on your credit score, too. Just by paying off your loan responsibly, you could be building your credit and strengthening your ability to qualify for a low rate.

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Higher vehicle values factor into the equation, too. Keep your vehicle in good condition and avoid putting too many miles on it to preserve its value. If you owe less than the car is worth, that can help you qualify for a refinance. Owing more than the car is worth makes refinancing trickier.

Tips to maximize your refinance savings in 2026

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To squeeze the most value out of refinancing your car, focus on these steps.

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• Improve your credit: Building your credit history, making timely payments, and avoiding debt can boost your score and help you qualify for lower rates.
• Compare offers: Don’t just take the first offer you find; comparison shopping is the best way to find a loan offer that fits your needs.
• Pay down debt: If you can put a dent in your credit card balance or other debt, you could improve your debt-to-income ratio, which lenders use when deciding your interest rate. A lower DTI could mean a lower interest rate.
• Organize your paperwork: Be prepared to take action when interest rates drop by keeping your financial documents in good order. File and organize your bank statements, pay stubs, and tax returns, too.

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‍Compare lenders for today’s rates

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Refinancing your auto loan can open up new opportunities for you in 2026 by lowering your payments or reducing your total loan costs. What could you do if you could pay less toward your car loan and more toward your financial goals? 

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Use our auto loan refinancing calculator to see the effect that lower interest rates or different loan terms can have on your car loan and your budget. RefiJet can help you compare offers to find the right auto refinancing solutions for you.

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FAQs

Is 2026 a good time to refinance my car loan?

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Yes, 2026 could be a great year to refinance, especially if auto loan interest rates drop. Keep an eye on current rates and keep working on improving your credit score if you want to qualify for the best loan offers.

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How does the auto loan refinancing process work?

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When you refinance an auto loan, you take out a new loan, with a different rate and terms. The new loan pays off and replaces your old auto loan. Shop around for lenders, compare offers, and fill out an application. Once approved, use the loan funds to pay off the previous loan. Then make payments on the new loan.

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What are the predictions for auto loan rates for 2026?

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Many market experts predict rate cuts in 2026, which could bring down auto loan rates. If the Federal Reserve, the nation’s central bank, cuts its benchmark interest rate, auto loan rates could make refinancing more affordable.

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What are the current auto refinance rates in 2026?

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According to the most recent Experian data, the average interest rate for a new car loan was 6.8% in 2025. For a used car loan, the average rate was 11.54%. With benchmark interest rate cuts from the Fed in late 2025, auto refinance rates may begin to decline in 2026.