Thinking about lowering your monthly car payment or snagging a better interest rate? If you already have a car loan, refinancing could be a smart move. But can you refinance your car loan with the same bank that gave you the loan in the first place? Let’s take a look at what’s possible, what to expect, and how to make the choice that’s right for you.
What Does It Mean to Refinance a Car Loan?
Refinancing your car loan just means you replace your existing loan with a new one. The goal is simple: make the loan work better for you. This could mean lowering your interest rate, reducing your payment, or changing the payoff timeline. When you refinance, your first loan is paid off by the new loan, and all your future payments go toward the new agreement.
Can You Refinance With the Same Bank?
Many banks and credit unions allow borrowers to refinance with them. Your bank already knows your payment history, credit score, and customer profile, which can make the process quicker. They may even offer you a better interest rate, especially if your credit score has gone up or market rates have dropped.
But not every bank offers this. Some only handle new auto loans, not refinances. Others set limits—like a cap on your car’s age or mileage, or how much remains on your loan. Always ask your bank or lender about their refinancing policies.
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When Is It Smart to Refinance With Your Current Bank?
Banks may offer special perks to loyal customers. You could get a faster application, friendlier service, or a loyalty discount. Here’s when it makes sense to refinance with your current bank:
- You’ve improved your credit score since taking out the original loan.
- Interest rates have dropped in general.
- Your bank offers competitive rates and low fees.
- You’ve built a solid payment history with your current lender.
If your bank checks these boxes, it’s worth asking for a quote.
Reasons Your Bank Might Say No
You might be surprised—sometimes your existing lender isn’t able or willing to refinance your loan. Here are the most common reasons:
- Your car is too old or has high mileage. Most banks set cutoffs for cars over 8-10 years old or with more than 100,000 miles.
- You owe more than the car is worth. This is called negative equity or being “upside down” on your loan.
- The remaining balance is too low.
- Your credit score has dropped or you’ve missed payments.
- Your car’s condition is poor.
Each bank sets its own rules, so ask your lender what they allow.
How to Apply for an Auto Loan Refinance — With Any Lender
Ready to refinance? Here are the simple steps to follow, whether you stick with your bank or look elsewhere:
- Decide what you want to change.
- Lower payment?
- Shorter or longer term?
- Better interest rate?
- Gather your documents.
- Your current loan info
- Proof of income
- Vehicle papers (mileage, VIN, title)
- Insurance certificate
- Request refinance quotes from your bank and others.
- Credit unions, online lenders, and local banks often compete for your business.
- Compare the offers.
- Look at interest rates, fees, new monthly payment, and total cost of the loan.
- Apply for the best offer.
- When your new loan is approved, the lender will pay off your old loan.
- Confirm your payoff.
- Make sure your old lender marks the loan as paid so you don’t double-pay.
Pros and Cons of Refinancing With the Same Bank
Pros
- Fast process. Your info is already on file.
- Familiar support. You know their system and staff.
- Possible loyalty perks like lower fees or better rates.
Cons
- Limited options. Rates may not be the lowest.
- Strict requirements for your car’s age or balance.
- Bank may not offer refinances at all.
What Else Should You Consider?
- Check if your current loan has prepayment penalties. Some loans charge a fee if you pay them off early.
- Review your new loan’s terms. A lower payment sounds great, but a longer term could cost more overall.
- Know your credit score. A higher score means better rates.
- Don’t be afraid to shop around. Even if you like your bank, other lenders may offer a better deal, especially credit unions.
How Does Refinancing Affect Your Credit?
When you apply for refinancing, lenders will run a “hard” credit check. This might drop your score a few points for a short while. If you get all your loan quotes within a two-week window, most scoring models count them as a single inquiry.
Why You Shouldn’t Rush the Decision
Refinancing can help you save money—but only if you do it right. Looking at all your options keeps you in control. Banks know this, and the smartest ones offer strong deals to keep good customers.
Conclusion
Refinancing your car loan with the same bank is possible and often convenient. But it’s not always guaranteed, nor is it always the best deal. Ask your bank about your options, compare their offer to others, and read the fine print. Sometimes loyalty pays, sometimes shopping around pays more. The best move is the one that saves you the most money and fits your financial goals. If you’re ready for a fresh start on your auto loan, take a look—your wallet will thank you.