5 steps for lowering your auto loan payment

About one in five new-car buyers paid $1,000 or more per month for auto loans in the fourth quarter of 2025, according to data from the car website Edmunds.

If your car payment is too high, it can keep you from meeting your other financial goals. At worst, it could mean taking on high-interest credit card debt to keep up with your everyday expenses or damaging your credit if you fall behind on payments.

However, you can lower your monthly car payment. If selling your car and opting for a cheaper model isn't an option, refinancing could be one way to prevent further financial damage. Here's what you need to know about auto loan refinancing.

Refinancing your auto loan can help you lower your payment, but it's not the right move for everyone. Doing this replaces your existing loan with a new auto loan, typically with a lower interest rate. However, you can also lower your monthly payment by extending your loan, which could mean paying more in interest and taking longer to pay it off.

Those who can benefit the most from refinancing would have a relatively new loan. Since more of your payment goes to interest at the start of your loan, refinancing may slow down progress for those who are already many years into a car loan.

Refinancing can also make sense if interest rates have fallen overall since you bought your car.

Finally, refinancing can be very helpful if your credit score has increased since you bought your car. A higher credit score can mean a lower interest rate and, therefore, a lower monthly payment.

Your credit score is a number that ranges from 300 to 850. It's based on your past loan payments, credit types and other factors. Lenders use this number to determine how much they'll charge you to borrow money. Typically, the higher your credit score, the more favorable loan terms you'll be offered.

If you haven't checked your credit score recently, you'll want to do so before you start the refinancing process. Some companies require borrowers to have a certain credit score — typically 600 — to qualify for an auto loan refinance.

To check your credit score, see if banks or credit card companies you already work with have your score online. You can also check Annualcreditreport.com to get a free copy of your credit report.

If your credit score has increased since you got your original loan, you could be offered a lower interest rate when you refinance.

If your credit score is the same or has gone down, raising your credit score before you refinance could help you lower your interest rate. Checking your credit score for errors, along with paying bills on time and in full for a few months, could help you raise your credit score.

Once you've determined your credit score is in a good place, it's time to look for a new auto loan.

To start shopping for an auto refinance loan, check with banks and credit unions you already work with — they might have a relationship discount.

Then, expand your search to other lenders. Some of our top picks for auto refinance loans include PenFed Credit Union for its low rates and Gravity Lending for its minimal fees.

Additionally, you can use a marketplace like myAutoloan or Autopay to get dozens of auto loan refinance quotes in a few minutes.

To find the best auto refinance loan, don't just look at the monthly payment — pay attention to the loan's term and the interest rate (APR). Looking for the lowest APR and the shortest term you can afford will help you pay off your car as quickly as possible.

Once you've found an option that fits your monthly budget, you'll apply for the auto refinance loan. To do this, you'll need some information, including:

• Your current auto loan information: You'll need information on who your current lender is and the current loan payoff amount
• Proof of income: You'll want to find your most recent W-2 and current pay stubs that can prove your income.
• Proof of residency: You'll need documentation with your name and current address, like a utility bill.
• Proof of identity: You may be asked for your driver's license.
• Proof of auto insurance: Lenders often require full coverage auto insurance, so you'll need to submit proof of that coverage to your new lender.
• Information about your vehicle: Have your vehicle's VIN number, make, model and year on hand.

Once you've been approved for the auto refinance, you'll sign any documents your new lender requires. You may also need to follow other instructions from your new and old lenders.

Finally, you'll want to link your bank account to your new loan servicer and make your lower monthly payment.

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At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every auto loan article is based on rigorous reporting by our team of expert writers and editors. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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