Can You Refinance a Car Loan With the Same Bank?


Published: October 19, 2022
By: Autopay

Can You Refinance a Car Loan With the Same Bank?

If you’re considering refinancing your car, you’re probably asking yourself “what is the easiest and cheapest way to refinance my auto loan?” If that leads you to wonder if you should ask your current lender to refinance your loan, there are some things that you should consider first. 

Can I refinance a car loan with the same bank?

Refinancing your car loan with the same bank or credit union that issued you the original loan is often a possibility since lenders don’t want to lose your business to a bank offering more competitive rates. 

However, not all lenders will allow you to do so, so you may need to check your lender’s policies. It may also depend on changes to your financial profile and credit score since you were granted your original loan. 

How Long Do I Have to Wait Before I Can Refinance My Auto Loan?

With auto loan refinancing, there is no official waiting period required between taking out a loan and refinancing it. You can refinance your loan as soon as you can find a lender willing to do so. 

However, you might have a hard time convincing your current lender to refinance your loan if you just recently took it out. That’s unless loan rates drop quickly and they are afraid to lose your business to a different lender.

The Pros and Cons of Refinancing With the Same Bank

When done responsibly, refinancing your car loan could come with many pros, like lower monthly payments, and very few cons. You most likely won’t even lose your car’s warranty should you decide to move forward with refinancing, but make sure to confirm with your provider beforehand.

However, refinancing your auto loan with the same lender offers a unique set of pros and cons that could affect your financial situation. 

Let’s examine the pros:

  • You might have less paperwork to fill out. Since your lender already has you on record as a borrower, you might have to provide less information in order to refinance your existing loan. This could save you paperwork and time, but that all depends on the lender and their underwriting policies. 
  • You might be more familiar with your current lender’s policies and customer service. If you’ve been using your loan provider for some time, you’re likely familiar with their policies and customer service. If you like your current lender, refinancing your loan through them ensures that you keep the same great service. 
  • Your loyalty might be rewarded with discounts. In an effort to keep you as a customer, a bank might offer you discounts on fees and interest rates when you refinance with them. You will need to contact your lender to ask them if they offer any refinancing discounts for existing customers.
  • You might be able to keep your online account. Keeping your current lender usually means that you can keep your online account and the documents stored within it. This will keep you from needing to learn a new lender’s systems and keep all of your auto lending documentation in one place; that way you have less to keep track of.

Now, let’s examine the cons:

  • You might miss out on lower interest rates and loan terms. Refinancing with the same bank, although convenient, isn’t always best if you’re after a better interest rate. If your loan terms are the reason you’re refinancing, it’s likely that you can find a loan company that will beat the loan terms that your current lender will offer you in their refinancing offer. 
  • Your current lender might charge prepayment penalties. Prepayment penalties help keep lenders from losing out on profits should you close the loan early. If your lender requires them, this will need to be paid before you can proceed with another loan. 
  • If you don’t like your current lender’s service and policies, refinancing with them will prolong your bad experience. If you don’t like your current lender’s service or policies, refinancing your car loan with them will only mean that you have to deal with them longer. 

Whether the pros or cons weigh heavier with you is based on your individual situation.

Is It Cheaper to Refinance an Auto Loan Through Your Current Lender?

Even though there is a possibility that refinancing your current loan through the same lender can save you some time, it might not save you much money. In fact, it might cost even more, since some lenders charge prepayment penalties. 

A prepayment penalty ensures that the lender receives at least some of the profits that they would make off the interest of the original loan, should it be cut short because it’s paid off early. 

These penalties are often 2% of the outstanding loan balance. So, if you refinance your $10,000 loan and your lender charges a 2% fee, you’ll pay $200 just to pay off your loan early and replace it with a new one. 

Plus, even if your lender offers you a discount on fees required to close on your new loan, the savings might not outweigh what you’ll save on interest with a better loan. 

It largely depends on factors like your financial profile and credit score, and whether or not they have improved since you originally took out the loan. You don’t need a perfect credit score to refinance your loan, but if it’s not very high, you should try to improve it even slightly before you consider refinancing. 

To find out how much money you could save by refinancing your auto loan, you can use our auto loan refinance calculator to estimate potential savings. 

Is It Easier to Refinance an Auto Loan Through Your Current Lender?

Whether or not refinancing with your auto loan’s current lender is any easier than doing so elsewhere depends on your experience with your lender. If you have made consistent, on-time payments throughout the life of the loan and have a positive credit history, refinancing with them will likely be straightforward. 

Depending on your lender’s refinancing process, this could mean that you don’t have to fill out a lengthy application, provide as many financial documents, or learn an entirely different online platform for managing your loans. 

On the other hand, if your lending experience has been difficult, especially if you have missed or late loan payments, you can expect that the refinancing process might be as well. 

If your lender finds you to be a higher credit risk, your refinance offer from your current lender might not be the best. Luckily, you have many other refinancing options.

Should You Refinance Your Car Loan With the Same Lender?

Whether or not you should refinance your car loan with your current auto lender depends on if there is a better refinancing deal out there for you. To make sure that you don’t miss one or have to refinance more than once, you should compare loans offered by multiple lenders to your current lender’s refinance offer. 

Shopping through a marketplace like AUTOPAY lets you compare loan terms from multiple lenders, so you can feel confident knowing that you’re getting the best deal. To find the best refinance loan for you, start by filling out our auto refinance form.

How to Know if You Shouldn’t Refinance With the Same Lender

You’ll know that you shouldn’t refinance with your current lender when you find a refinance offer that beats the one that your current lender offers. Since lenders are always looking to attract new customers, it’s likely that there’s a lender out there willing to give you better terms. 

If the terms of your loan aren’t your reason for refinancing your auto loan, a negative experience with your lender might be. Whether that negative experience is a bad customer service experience or unexpected fees, you shouldn’t refinance with the same lender if you haven’t been happy with your lending relationship.

How to Refinance Your Auto Loan With the Same Lender

When you refinance your auto loan through the same lender, you can expect the process to be similar to that of applying for your original loan. However, each lender will be different. You can expect the refinancing process through your current lender to look something like this:

  • You will fill out an application. Your lender should have all of your personal, loan, and vehicle information on file, like the current loan amount and if you have a cosigner. So, the application process for current borrowers is often simple, but it kicks off the rest of the process. This is your chance to update any financial or personal information that might affect whether you will be approved or denied for refinancing. 
  • Your lender will review your eligibility. Once your lender has received your application, they will work to figure out if you qualify for a new loan. To do so, they will review your proof of income, credit history, current auto loan standing, vehicle value and more. 
  • You will receive your lender’s decision. Once your lender has determined whether or not you qualify, they will issue you an approval or denial. This can come by way of email, phone call, an in-person discussion or even a text, so make sure to confirm which method your lender will use before decision day. 
  • If you’re approved, you’ll follow your lender’s instructions to close on the loan. Depending on whether you are working with an online lender or an in-person one, your lender will either instruct you to complete the loan process online or to meet them in person. During this process, you should be prepared to sign the loan contract and provide any last-minute documents that your lender might need. 
  • Your loan funds will be distributed. If you’re refinancing through the same lender, they’ll handle paying off the old loan and bringing your balance back to current, so you won’t need to handle distribution. 

All in all, refinancing an auto loan should not take more than a couple of weeks from start to finish.