How Refinancing Your Auto Could Lower Your Payment
If you own pretty much anything on four wheels, chances are you’ve been contacted by a dealership wanting to buy your vehicle.
When you saw that offer, admit it, the thought crossed your mind for a fleeting moment. Only one problem: what are you going to buy if you turn over the keys to your current ride?
The average price of a new car in June 2025 was $48,907, according to Kelley Blue Book. That price tag may not be in your budget right now.
The value of your used vehicle could pay off for you in a way other than selling it, especially if you’re looking to lower your monthly payment.
Refinance to possibly lower your payment
What does the value of your car have to do with refinancing? The higher the price you could get for your used car, the better your ability to refinance into a loan that could lower your monthly payment. It’s one of the things lenders look for — the loan-to-value ratio.
Used car values are still high. And despite interest rate hikes, auto refinance companies are still offering competitive rates.
Depending on your goal, refinancing could lower your monthly payment or shorten your term. If your credit score has gone up since you contracted for your original loan, that’s even more reason to consider refinancing. You might be able to get a lower rate, reducing your monthly payment.
You can check out an estimated payment using a prequalification calculator, with no impact to your credit.
Some lenders also include no payments for 60 days when you refinance, giving you a break from making a car payment for a couple of months. More money in your pocket now if you need that.
Things to consider when refinancing
If you’re close to paying off your original loan, you’re probably better off sticking it out with that one.
If your credit score is lower than it was when you contracted for your original loan, you’re unlikely to get a better rate by refinancing.
Do watch out for the length of the term if you refinance. A longer term, even with a better rate, could result in paying more interest in the long run. Generally, if you can lower the interest rate on your loan by 1% or more, you might be able to save enough in interest over the life of the loan to make refinancing worthwhile.
Bottom line: The decision whether to refinance your car really depends on your personal situation and your goals. The better your credit, the more chance you have of getting a better rate and lowering your payment.
Sound good? What’s the next step?
If refinancing sounds like it might be an option for you, you’ll want to find a company that offers good service and one that makes the process easy. ModeSM is the fast, easy online way to refinance your loan. And it’s by GM Financial, so it’s financing you can trust.
Where available, you can even add a Vehicle Service Contract (VSC) and Guaranteed Asset Protection (GAP) during the application process, and payment for those protection products will be added to your monthly payment. The VSC plan pays for covered repairs on top of the manufacturer’s warranty following a breakdown. In the event your vehicle is stolen or is a total loss from a crash, GAP can help cover you where the insurance settlement is less than the contractual balance of your loan.1
We have a few advantages at Mode that you might want to consider when comparing lenders:
No application fees2
Friendly and knowledgeable customer service team
Fast and easy online application process
60 days until your first payment (in the states where it’s allowed)
All our credit and funding professionals are in-house, so you’ll have an answer on your application in less than 24 hours
Here are some of the things we look for (hint: you don’t have to have perfect credit):
Monthly minimum income of $2,000
FICO score > 450
Vehicle nine years or newer
Less than 100,000 miles on the vehicle
GM Financial customers with an active contract are not eligible to refinance through Mode. If you’re a lease customer looking to purchase your vehicle at the end of your lease, visit your GM dealer or see our information at Mode about a lease buyout.
Mode has a 4.6 out of 5 rating with Trustpilot, and customers love the process.3
“Mode is the GOAT!” said customer Matt B. “Everything was easy. Great rate, super service, easy online experience.”
So, if you want a great experience refinancing your auto, see if you prequalify today.
1See contract for limitations.
2You will not be charged application or processing fees by Mode to refinance your vehicle. Depending on your state, title and registration fees may apply.
3See all customer reviews.
By Julie Powell, GM Financial