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SEP 26, 2021

Why can’t I refinance my auto loan?

By

Darlene Roberston

7 min read

Not being able to refinance your vehicle loan can feel frustrating. Here are some reasons why you cannot refinance your auto loan and problem-solving tips.

At Caribou, we aim to help customers in a wide range of financial situations save money on their auto loans. However, there are some situations where we will be unable to connect you with a lender for a refinance. Below, we’ve listed some of the most common reasons customers are unable to find auto refinancing options, along with some problem-solving tips.

Honda Pilot SUV in the Snow

Loan amount is a lot higher than vehicle value

Your Loan-to-Value (LTV) ratio is important when you’re refinancing your car. You won’t be able to refinance if your loan balance is too much higher than the current value of your vehicle. But this isn’t a permanent problem. If you can, try paying down your loan balance before trying to refinance again. You can also check back in a few months to see if continuing to make your monthly payments has made it possible to refinance.

Your income ratio

Lenders look at your current income compared to your debt, car payments, or loan amount to determine if you qualify for a loan. You may hear terms like:

  • Debt to Income (DTI): How much you owe compared to your income

  • Single Car Payment to Income (PTI): How much your car payments are compared to your income

  • Total Loan Amount to Income (LTI): How much your total loan amount is compared to your income

You can get better deals on your auto refinance if your debts and payments are much lower than what you earn. If your debts and payments are higher than your income, you may not see options for refinancing. If you don’t see options for this reason, consider re-applying with a cosigner.

Low credit history / credit age

It’s important to have a credit history built up to get the best deal on your auto loan. Lenders look at your credit age when they decide if you qualify for an auto loan. A longer credit history helps them to figure out how you have dealt with other loans in the past. If you’ve only recently started to build credit, you might still be able to refinance if you find someone who will cosign on your loan. Otherwise, continue to build your credit if possible.

Credit score

Depending on your state and credit score, Caribou may be able to connect you with a lender for a refinance. However, if your credit score is too low, many lenders will not qualify you for a new auto loan. But even with low credit, you may be able to refinance your car if you find a cosigner.

Also, consider checking your credit report for errors. If your credit score has gone down because of an error, gather evidence and dispute the error with your credit reporting agency. Fixing errors can help your credit score go up almost immediately. In all other cases, continue to build your credit over time.

Derogatory marks on your credit

Besides your credit age or credit score, lenders also look at derogatory (derog) marks on your credit to decide if you qualify for an auto loan. Derogatory marks that can keep you from being able to refinance include:

  • Late payments

  • Repossessions

  • Collections

  • Foreclosures

  • Etc.

Just like with a low credit age, you might still be able to refinance if you find someone to cosign on your loan. Otherwise, keep building your credit. If there are marks on your credit that are wrong, gather evidence and then dispute the error with your credit reporting agency.

Vehicle is too old / has too many miles

The age or mileage of your car can play a big role in determining whether or not you’re able to get a refinance. Each lender has its own limits on vehicle age or mileage. If none of our current lending partners in your state qualify your vehicle for an auto loan, you will not see options for a refinance. We’re always working to expand our lending partners, so please check again soon! We may be able to help in the future.

Where you live

We don’t currently offer refinancing in a few states, but we’re always expanding. If you live in a state where refinancing isn’t available, check back later — we’ll be in all 50 states soon!

With Caribou, you could start saving today!

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Contact Details
NMLS #1746612
1.877.445.0070

Mon - Fri: 9am - 8pm EST

Sat - Sun: 9am - 4pm EST

1717 Rhode Island Ave, NW, Suite 500 Washington, DC 20036

Caribou Insurance Services, LLC
1.877.255.2660
Mon - Fri: 9am - 8pm ET
insurance@gocaribou.com


* Refinance savings may result from a lower interest rate, longer term, or both. There is no guarantee of savings. Your actual savings, if any, may vary based on interest rates, the repayment term, the amount financed, and other factors.

+ To check the refinance rates and terms you qualify for, we conduct a soft credit pull that will not affect your credit score. However, if you choose a loan product and continue your application, we or one of our lending partners will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

++ Social security number is required should you choose to move forward in the loan application process.

** APR is the Annual Percentage Rate. Your actual APR may be different. Your APR is based on multiple factors including your credit profile and the loan to value of the vehicle. Advertised 1.99% APR is based on a representative example of refinancing a 2021 or newer vehicle with mileage of less than 85,000 miles and a FICO score higher than 740. Lowest Rate not available in CA, ME, MD, MS, NE, NV, PA, WV, WI and VT. Not all borrowers will receive the lowest rate. All applications are subject to verification of employment. We do not guarantee that you will receive any loan offers or that your loan application will be approved. If approved, your actual rate will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Insurance savings will not result from lower APR.

Terms and Conditions apply. Caribou reserves the right to modify or discontinue products and benefits at any time without notice. Participating lenders, rates and terms are also subject to change at any time without notice. The information you provide to us is an inquiry to determine whether our lenders can make you a loan offer. If any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. We do not guarantee that you will receive any loan offers or that your loan application will be approved. If approved, your actual rate will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors.

Insurance products offered through Bindable and Caribou Insurance Services, LLC. Caribou is working with Bindable who owns MyLifeProtected and MassDrive Insurance Group, LLC, the licensed agent for all products.


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