Should I Refinance My Car With the Same Lender?

Deciding if you should refinance with your current lender or a new one may depend on whether you value convenience or maximizing possible savings.

Elliot Rieth | 

Jun 25, 2024 | 4 min read

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Carefully considering the terms you negotiate for your auto loan could save you thousands of dollars across the lifespan of your repayment plan. Similarly, deciding whether to refinance with your existing lender or opt for a new one can also have a significant financial impact.

While it's important to borrow from an institution you can trust, you also want to make sure you're getting the best terms possible. Staying with your current lender is often a simple option, but exploring what a different lender has to offer could ultimately lead to more savings.

Can I Refinance My Car With the Same Lender?

Your ability to refinance with the same lender will ultimately depend on your lender's policies. While many lenders do offer refinancing, some may not, so check your loan agreement to determine whether this is an option for you.

Some lenders may also have stipulations on when they will and won't refinance your car loan based on your vehicle and loan status. For example, lenders may not want to refinance older cars because of the risk associated with the vehicle depreciating or breaking down before the loan is fully repaid.

Some lenders may also not refinance new loans or those with an outstanding balance above or below a predetermined limit, which can vary by lender.

Why You May Choose to Refinance With the Same Lender

Refinancing with your current lender can be more convenient than shopping around. It's likely going to be easier and quicker to refinance since your current lender already has your financial information and current loan paperwork. You may also have a positive lending experience with this institution, and the thought of making a switch to a different lender could leave a lot unknown.

Refinancing With a Different Lender

If you value cost savings over convenience, you might consider shopping around and refinancing with a different lender. While you can still compare rates with your current lender — which may end up being the best option — you'll be able to get a clearer picture of your available options.

Not only does comparing your options give you the chance to find the best possible rate, it could also help you negotiate your current lender's rate. If you find another institution offering a better refinancing deal than your current lender, you might be able to leverage that information to improve your existing terms without needing to switch.

While choosing to refinance your car loan with a different lender could save you money, you will have to start a new account and a new relationship, which will take time and effort on your end. You'll also need to make a decision quickly because your credit score could be impacted if you don't choose a new lender within the grace period offered by credit bureaus.

When to Consider Refinancing Your Car Loan

Your decision to refinance your car loan will likely depend on both your own personal financial situation and how macroeconomic conditions have changed since you originally started your loan.

If your credit has improved since you opened your loan, you may want to shop around to see if your new status could get you a lower rate. With better credit you may also be able to access shorter loan terms, cutting down your total number of remaining payments and therefore reducing interest.

Alternatively, if your current monthly payments are too high to afford, refinancing could help you cut down on monthly costs by stretching the repayment of your principal (the amount loaned) out over more time. Keep in mind this will likely increase your long-term costs as you'll pay more in interest over time.

Outside of your personal circumstances, when national interest rates drop, you could save on interest by refinancing your loan. National interest rates are always shifting due to influences such as inflation and monetary policy.

You might be locked currently into the rates that were effective when you signed your original loan. But if national rates drop, you may have the opportunity to refinance and reduce the total interest you'll pay on the rest of your loan. While you'll still have to qualify for these rates, refinancing gives you the chance to find out if you do.

Elliot Rieth

Elliot Rieth is a writer who was born and raised in Michigan, the center of the American automotive industry. With a background in the industry that spans from sales to digital marketing, Elliot has years of experience working directly with dealers and OEMs to create digital content and educate potential customers. When Elliot isn’t writing about horsepower or EVs, he can be found with his two greyhounds enjoying a new book or record.