Find Out How Long It Take To Refinance a Car Loan

Refinancing a car loan can take anywhere from a few hours to a couple of weeks. This means that if you took a loan from the dealership because it was convenient, but it turned out to be a mistake, you can apply for a new loan as soon as you drive off the lot. The average car payment for a loan in the U.S. is $716 for new cars and $526 for a used model.

With over 80% of buyers choosing to finance their purchase, many are looking for the best rates and terms. If that sounds like you, you're going to want to learn as much as you can about the process, including how long refinancing the loan on your vehicle will take.

Looking to refinance? Easily compare rates from lenders below.

While it's true that you can refinance your car loan anytime you want, rushing the process will not improve your chances of approval. Wait times can vary based on factors such as how long it takes you to collect your documents or the bank's hold time for releasing funds.

While every step of the process can cause a delay, in this article, our expert automotive journalists show you the ins and outs of refinancing and give your tips to speed the process up.

How Can You Speed Up the Auto Refinancing Process?

If you're wondering how long it takes to refinance a car loan, you're not alone. Drivers refinanced a whopping 2.1 million car loans during the first half of 2021. According to Rate Genius, those people save an average of $1,158 annually.

With statistics like that, it's easy to see why you might want to follow their lead. Of course, your loan's processing time will vary depending on which financial institution you choose to work with. But is there any way to make the auto refinancing process go faster? Yes, as it turns out. Here are a few tips to follow:

Have Your Documents Ready

Getting organized in advance will speed up the refinancing process. Most lenders require copies of standard documents, so gather the following items together before you apply:

• Driver's license.

• Proof of income.

• Odometer reading.

• Proof of insurance.

• Vehicle registration.

• Proof of residency.

• Vehicle title.

Be Honest on Your Application

Fudging sections of your application, such as your employment status, won't increase your chances of approval. In fact, discrepancies, missing information, or outright lies can delay the process, cause a lender to deny your loan, or even result in criminal fraud charges.

Respond to Your Bank's Requests Promptly

There may be occasions during the approval process when your lender needs additional information. You must respond to these requests quickly. Providing missing documents or returning a phone call the same day you receive them will make the process go faster and smoother.

Know Your Credit File

If your credit score is less than 600, be prepared to explain any negative items on your report. For example, if you were ill, went through a divorce, or were laid off from your job and your credit suffered, let your bank's loan agent know. Be honest because the loan processor wants your business, and it's their job to get you approved.

Reasons to Consider Refinancing

Another important question about car loan refinancing is whether it's worth the effort. Despite any possible wait times, there are some reasons you may want to consider refinancing your loan.

If you recently bought your car, you may find that your payment is too high, the interest rate isn't competitive, or you're simply unhappy with your lender's performance. Here are a few circumstances in which you may want to refinance:

You Got a Bad Loan

When you're sitting in the hot seat in front of the dealership's finance manager, it's easy to miss the big picture and agree to a loan that doesn't work for you in the long run. Whether the interest rate is too high or the term is too long — or too short — it may be a wise financial decision to apply for a new one.

If you can find a car loan that beats your current rate, go for it, particularly if rates are declining or your dealership padded the quoted rate to boost their profits.

Your Credit Score Has Gone Up

Buying a new car with a loan will improve your credit score as long as you make the payments on time. Even after just 60 days, it's possible to see a nice uptick in your rating. You may qualify for a lower interest rate with your new, improved credit score.