A year into my auto loan, I decided to see if I could save some money by refinancing. What started as a curious look at interest rates quickly turned into a crash course in how to navigate auto refinance offers and figure out if a deal was really as good as it looked.
I went through our list of the best auto loan refinance loans to get the full refinancing experience. I chose one direct lender, Ally, and two loan aggregators — Caribou and Gravity Lending — which are companies that connect borrowers to multiple loan offers through various lenders with one application. This let me see multiple refinance offers so I could compare them quickly.
My goal was to lower the monthly payment and interest rate on my 2020 Subaru Ascent. I financed through the dealer, and I’ve paid 14 months on the 60-month loan.
But before digging into the details, I want to note that I didn’t need a new loan — I can still afford my original loan — and so didn’t feel pressured to go with an offer. I also have good credit, so the rates in this article may not be achievable for everyone.
Here are the things I learned in my refinancing experience.
Pre-qualification interest rates can be 1-2% higher than actual offers
Because pre-qualification is based on a soft credit check, it provides lenders very little information. It gives you an idea of the types of refinance loans that lenders might offer you — but those offers can change when the lender gets more information about you.
Caribou and Ally showed or emailed me offers within minutes when I pre-qualified with them. The rates ranged from 6.09% to 7.69% APR, with loans between 36 and 84 months. Each offer also displayed what the monthly payment would be with those terms.
I got an idea of the exact rates I qualified for after Caribou and Gravity Lending called to submit an official application, which required a hard inquiry on my credit report. After getting more information about my financial situation and my vehicle, the lenders improved my offers. Ally didn’t call me for a follow-up, and I opted not to move forward with the offers.
Note from the writer: It’s worth noting that one of the loan officers knew that NerdWallet is a business partner with his company and made a comment about it when I listed NerdWallet as my employer. However, since I applied through NerdWallet, I was able to follow the same process as our readers — the loan officer recognizing my workplace didn’t change the process.
The best rate I was offered was 4.99% APR, which is a good bit lower than the 7.69% that popped up when I pre-qualified. In fact, our article about the average car loan interest rates for each credit score range predicted my actual interest rate offers more accurately than pre-qualifying did.
The takeaway
Pre-qualified rates get you in the ballpark of what you might qualify for, but they may not be a reflection of the actual loan offers. Be prepared for the rates to be a percentage point or two higher or lower than what you pre-qualify for.
Lenders might try to sell protection you don’t need
While I was talking with a loan officer about an offer, he mentioned I had a few “options” to choose from. I quickly realized the platinum package he was describing was a type of extended warranty.
I hadn’t asked for one, but he was including it in my offer pricing. And he went through the full sales pitch of what my “fully protected payment” would include: coverage for mechanical parts, cosmetic protection, gap insurance and $1,000 toward a deductible payment with a total loss.
It would also add $84.19 to my monthly payment — or $5,051.40 for a 60-month loan — for something I didn’t need.
The takeaway
Some lenders sell more than just car loans, and they might include the price of extra features or services in your monthly payment from the start. Be sure that the loan amount you’re quoted doesn’t include anything outside of what you want.
Lenders present offers as monthly savings — and NerdWallet’s calculator showed me why this was a problem
Caribou presented its best offer as 4.99% APR for 60 months, which the loan officer said came to $328.96 per month. I owe 58 months on my current loan, so I would technically extend my car loan by 2 months. Still, this payment would save me $5.04 a month. Not a huge savings, but over the next five years, that totals over $300 in interest.
That sounded great until I checked the math with our auto loan refinance calculator.
According to the calculator, dropping my interest rate to 4.99% should have lowered my monthly payment by almost $20 per month and saved me over $500 throughout the loan, even with two extra months of payments. When I told Caribou’s loan officer that his math wasn’t adding up, he explained that the loan included a $40 application fee, a $33 title transfer fee and a $699 processing fee — that all added up to $772.
By adding those fees to my loan, the new lender increased the amount I would borrow — taking that much equity before I made a single payment. The lender was going to charge me interest on that $772, too.
Even though it looked like I would save money because the monthly payment was lower, I would have paid $284.29 more interest on my loan if I’d refinanced with that offer.
Note from the writer: Entering loan terms into NerdWallet’s auto loan refinance calculator while I was on the phone with both loan officers made it easy to compare terms with my current loan. I was able to point out differences in what the monthly payments should have been and what the loan officers were telling me. Having the calculator as part of my refinancing toolbox helped me see when offers weren’t accomplishing my goal when loan officers made it appear like they were.
The takeaway
Lenders can present loan terms in a way that looks like they’ll save you money over a whole loan, but it’s important that you do the math and ask about everything that’s included in the new loan. This can help you avoid paying fees that you didn’t know you were agreeing to pay.
Gap insurance doesn’t carry over to a new loan
I opted for a gap insurance policy when I bought my vehicle to help cover costs if I had a car wreck soon after taking out my current car loan. And I had assumed gap insurance would transfer or be included in the refinancing quotes.
So Gravity Lending’s loan officer surprised me when he said my monthly payment would go up if I added gap insurance.
Because gap insurance is a policy that you take out as part of a loan, it ends when your new lender pays off your current loan as part of the refinancing process. That means if you want the coverage, you’ll need to add it onto your new loan if you refinance.
The takeaway
If you need gap insurance, know that adding it to your refinance loan will likely raise your new monthly payment. Mention to your loan officer upfront that you need to add gap insurance to your quote to avoid surprises.
Why I didn’t refinance my auto loan
On the surface, the two refinancing offers I considered looked like they would save me money, but fees canceled out any savings the lower interest rates would’ve given me.
Caribou’s best offer of 4.99% APR for 60 months lost its shine when I figured out that I would pay $772 in fees. Gravity Lending’s best offer was 5.49% APR (dropped from 5.74% because I agreed to auto-payments) for 60 months, but title and application fees tacked on to the loan would have ended up costing me more in the long run as well.
I was surprised that neither company could save me money because I had assumed I was a good candidate for refinancing. I bought my Subaru Ascent in May 2025, which Cox Automotive noted wasn’t a great time to purchase a used vehicle. My credit score has improved since I took out my auto loan, and I financed through a dealership. All signs pointed to refinancing.
So I took a closer look at my current loan and how I went about financing my vehicle.
Even though I could qualify for a lower interest rate now, I got a decent rate with my current loan. It also helped that I had a few things going for me when I purchased my vehicle. I wanted a newer model but didn’t need a different car, which meant I could walk away easily. I was firm with the dealership about the most I would pay monthly and take out for a loan, so they had to meet my terms to sell me a vehicle. Lastly, I was trading in a car that was in high demand, which came with a good trade-in value.
The takeaway
Your financial situation and refinancing options will likely change with the economy. Depending on your current loan’s terms and when you opened it, what looks like a good refinancing offer in today’s market might be less than ideal. This might be a sign that refinancing isn’t the best option right now, but a year or two down the road could change the situation for you for the better.
Article sources
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- 1.Cox Automotive. Wholesale Used-Vehicle Prices Decrease in First Half of May. Accessed Sep 15, 2026.
