How to Refinance a Car Loan with Bad Credit (Under 620)
Lenders that work with sub-620 scores, the rate reality, cosigner strategy, and the 12-month plan to move into a better tier.
Refinancing with a credit score under 620 is possible — but the goal isn't always a lower rate. Sometimes it's getting out of a predatory loan, reducing your monthly payment, or setting up a 12-month runway to better terms. Here's what your options actually look like.
What Lenders Consider "Bad Credit" for Auto Refinance
Most prime lenders (banks, credit unions, LightStream) have credit score floors around 620–640. Below that, you're in subprime territory. Lenders who specialize in non-prime auto loans include RefiJet, OpenRoad Lending, and some credit unions with community-focused lending programs.
| Credit Score | Tier | Refinance Options | Typical Rate Range |
|---|---|---|---|
| 640+ | Non-prime floor | Most lenders available | 9–13% |
| 600–639 | Subprime | Specialty lenders, some CUs | 13–18% |
| 560–599 | Deep Subprime | Very limited; cosigner helps | 18–24% |
| Under 560 | High-risk | Few options; BHPH only | 24%+ |
When It Still Makes Sense to Refinance
If your current loan is at 22–25% (common for Buy Here Pay Here financing), refinancing to even 18% saves real money. A $12,000 balance at 22% over 48 months costs $3,650 in interest. At 18%, that drops to $2,940 — saving $710 even at a still-high rate.
The other scenario: you need to lower your monthly payment due to a financial hardship. Extending the term through refinancing — even at a similar rate — can free up $80–150/month. That's sometimes the priority.
The Cosigner Strategy
A cosigner with a credit score of 700+ can move your effective rate tier from subprime to prime — potentially cutting your rate in half. The cosigner is equally responsible for the loan. If you miss payments, it damages their credit. This arrangement works best when:
- You have stable income and are working on credit repair
- Your score is temporarily low (not structurally broken)
- You have a family member or close friend willing and financially able to take on the risk
Set up autopay immediately if you go this route — a missed payment on a cosigned loan damages two credit files.
The 12-Month Credit Improvement Plan
If your current loan is manageable (not predatory), the best move may be to wait and rebuild before refinancing. Here's a realistic 12-month sequence:
| Month | Action | Typical Score Impact |
|---|---|---|
| Month 1–2 | Check your credit report; dispute errors (1 in 4 reports has one) | +10 to +40 points on errors fixed |
| Month 1–3 | Pay down credit card balances below 30% utilization | +15 to +35 points |
| Month 3–6 | 12 consecutive on-time payments across all accounts | +20 to +40 points over time |
| Month 6 | Check rates — may qualify for non-prime refinance already | Possible 620+ threshold |
| Month 9–12 | Continue building payment history; apply for refinance | Target 640–680 for better options |
Moving from 580 to 660 can reduce your auto loan rate by 4–6 percentage points. On a $20,000 balance, that's $2,000–3,000 in saved interest — which is why the wait is often worth it.
Lenders to Consider for Sub-620 Refinance
- RefiJet: Specializes in auto refinance for all credit tiers; works with scores as low as 525
- OpenRoad Lending: Non-prime specialist; accessible online application
- myAutoloan: Marketplace that submits to multiple lenders simultaneously; useful for seeing real options
- Local credit unions: Many have hardship or community lending programs not advertised online
- Capital One Auto: Uses pre-qualification (soft pull); accessible to non-prime borrowers
Related: when does refinancing actually make sense? and credit score tiers and what they mean for your rate.