Top Cash-Out Refinance Auto Loans
What is cash-out auto loan refinancing? Is it the right option for you?
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Cash-out auto refinancing, also called cash-back refinancing, works just like typical auto loan refinancing. You replace your current car loan with a new one, often to reduce your interest rate or monthly payment. But with cash-out refinancing, you also borrow extra money against the equity in your vehicle and roll that amount into your refinance loan.
For example, if you only owe $5,000 on your car loan, but your vehicle is worth $10,000, you have $5,000 worth of equity. If you qualify for a cash-out refinance loan, you might get a new loan for the car’s value of $10,000. You could then pay off the original loan and receive $5,000 cash, usually in the form of a check. Not all lenders make cash-out auto refinancing loans, and cash limits vary for those that do.
Refinancing your auto loan may be an opportunity to reduce your interest rate and monthly payment. Tapping into any equity at the same time can provide cash for emergencies, to pay off debt or for other needs. This fast access to funds may seem appealing, but you should take time to consider whether it’s the best option for your financial situation.
Below you’ll find lenders who offer cash-out auto refinance loans, followed by questions to help you weigh the pros and cons of cash-out refinancing.
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Why trust NerdWallet
- 45+ auto loan products reviewed and rated by our team of experts.
- 30+ years of combined experience covering financial topics.
- Objective, comprehensive star rating system assessing 4 categories and 60+ data points across direct lenders and aggregators.
- Governed by NerdWallet's strict guidelines for editorial integrity.
Top Cash-Out Refinance Auto Loans From Our Partners
Lender | NerdWallet Rating | Est. APR | Loan amount | Min. credit score | Learn more |
|---|---|---|---|---|---|
4.5 /5 | 5.24-21.99% | $5,000-$150,000 | 500 | See Offers on RefiJet's website |
Our pick for
Cash-out refinancing through loan aggregators
Cash-out refinancing through loan aggregators
RefiJet - Refinance loan
5.24-21.99%
$5,000-$150,000
500
The pros and cons of cash-out auto loan refinancing
These questions can help you decide if cash-out auto refinancing is the best solution for you.
Would auto loan refinancing significantly reduce your interest rate and lower your monthly payment? Maybe your credit score has improved since you financed your car, or you’ve realized you could qualify for a lower rate than a dealership gave you. If refinancing by itself would reduce your monthly expenses overall, it might make sense to include additional funds with your auto refinance for fast access to needed cash.
How does the rate of your auto refinance loan compare to other borrowing options? Auto loan rates vary greatly, depending on your credit profile and other factors. Before going with cash-out refinancing, compare the rate you will be paying with other options such as personal loans or credit card advances. If you’re considering a high-rate payday loan for an emergency financial situation, cash-out refinancing might be a lower-rate alternative.
Could your cash-out refinance loan balance result in negative equity problems? When your auto loan balance exceeds what your car is worth, it’s called negative equity or being upside down on a car loan. Some lenders will allow you to borrow more than your car’s value, putting your car's loan-to-value ratio at more than 100%. If you owe 150% of your car’s value, and it’s totaled, your insurance company would pay 100% of the car’s value, and you would owe the remaining balance of your loan. Also, it can be difficult to trade in or sell a car with negative equity, so cash-out refinancing might not be a good idea if you don’t plan to keep your vehicle for a while.
Is borrowing extra now worth adding several years to your loan? Often borrowers will refinance to a longer term, as a way to lower their monthly payment. But this can result in paying more interest over the life of the loan. The same is true if you extend your loan term to offset the increased balance from borrowing extra for cash.
Will cash-out auto refinancing increase your monthly car payment? If you increase your loan balance by borrowing extra cash, but you don’t extend the loan term or reduce your rate significantly, you will be paying a higher monthly payment. Can you afford this higher payment? Keep in mind, your car is loan collateral, putting you at risk of having it repossessed if you fall behind on payments.
Last updated on April 30, 2024
NerdWallet's Top Cash-Out Refinance Auto Loans
- RefiJet - Refinance loan: Best for Cash-out refinancing through loan aggregators
