LendingClub auto loan review: Ability to prequalify for auto loan refinancing

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In a Nutshell

LendingClub offers auto loan refinancing, giving applicants the ability to apply for prequalification. The lender offers competitive starting interest rates to borrowers with what the company considers to be excellent credit.

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Pros Cons
Prequalification available Must have a current loan open for at least one month, with at least 24 months of remaining payments
No origination fee or prepayment penalty Vehicle age, use and mileage restrictions apply
  Not available in all 50 states

What you need to know about LendingClub auto refinancing

If you’re looking to reduce your current monthly car payment or lower the interest rate on your auto loan, LendingClub auto refinancing could be worth considering. LendingClub is an online marketplace that can connect you with investors who back loans. This lender offers a range of lending options that include auto refinancing, personal loans, small-business loans and K-12 education loans.

But if you’re shopping for a new or used car and want to take out a loan, you’ll need to look for financing elsewhere. Though LendingClub does offer personal loans and auto refinancing loans, it doesn’t offer traditional car loans.

Here are some key features of a LendingClub auto refinancing loan that you’ll want to consider.

No origination fee or prepayment penalty

Some lenders charge an origination fee that covers the cost of processing your loan application and paying out the funds, but LendingClub doesn’t charge this fee.

LendingClub doesn’t charge a prepayment penalty either — this means you can repay all or part of your loan early without being charged to do so. And paying off your loan sooner can mean saving money on interest.

When shopping for auto refinancing, make sure to asses all fees that could make your loan more expensive overall.

Vehicle age and mileage restrictions

To qualify for auto refinancing with LendingClub, you must have a current auto loan with a balance between $5,000 and $55,000. You also need to have at least 24 months of remaining payments on your car loan, and your loan must have been initiated at least one month ago.

LendingClub will only consider refinancing of vehicles that are 10 years old or newer and that have fewer than 120,000 miles. You also won’t be able to refinance any recreational vehicles, motorcycles or commercial vehicles.

And the following makes/models don’t qualify: Hummer, Pontiac, Saab, Saturn, Daewoo, Isuzu, Suzuki, Nissan Leaf and Oldsmobile.

Offer within minutes if you qualify

LendingClub offers applicants the ability to apply for prequalification, which won’t affect your credit scores. Once you provide some basic personal information, you can receive multiple auto refinancing offers within minutes — if you’re eligible. Although getting prequalified doesn’t mean you’re approved for a loan, it does help you understand whether you’re likely to be approved and the loan terms you might qualify for.

If you formally apply for a loan after selecting an offer, the entire application process can take up to 15 business days to complete. That said, even if you’re approved for a loan from LendingClub, continue to make payments on your existing loan until your original lender confirms that your auto loan has been repaid, or else you might face late penalties.

A closer look at LendingClub auto refinancing

If you’re considering applying for LendingClub auto refinancing, here are some other details to know.

  • Co-borrowers are allowed — LendingClub allows you to add a co-borrower to an application. In some cases, a co-borrower could help you qualify for better terms.
  • State restrictions — Auto refinancing isn’t available to borrowers in every state. Make sure to check if it’s available in your state before taking the time to apply.
  • Loan amount — The payoff amount on your current auto loan needs to be between $5,000 and $55,000. But in Arizona, the loan amount ranges from $5,000 to $50,000. And in Kentucky, the loan amount ranges from $15,000 to $55,000.
  • Existing loan — For your current auto loan to qualify for refinancing, it must have at least 24 months of remaining payments. Your car must be registered in the state you live in, and all payments on your current loan must have been made on time. Additionally, all loans must have been initiated at least one month earlier. Also, if you live in California, you can’t make changes to your title if your registration expires within 60 days from the date you apply. 
  • Competitive starting interest rates — While LendingClub doesn’t provide specific lending requirements, the lender says it offers the most favorable rates to applicants with what it determines are high credit scores; a long, successful credit history; and a low debt-to-income ratio.

Is LendingClub auto refinancing right for you?

If you have an eligible auto loan and are looking for a lower interest rate or a lower monthly payment, LendingClub auto refinancing could be a good fit. But to qualify for the best terms, LendingClub says applicants must have excellent credit, which the company says includes healthy credit scores, a low percentage of outstanding debt relative to income, and a strong credit history.

Even if you’re not ready to make a final decision on refinancing, you can apply for prequalification to check your estimated rate and terms beforehand to see if it makes sense to move forward. LendingClub’s simple process to apply for prequalification could allow you to explore its auto refinancing offers without affecting your credit scores.

But if you need more lending options, like a lease buyout loan or new car financing, you’ll have to find another lender.

How to apply for LendingClub auto refinancing

To apply for prequalification for a LendingClub auto refinance loan, you must be at least 18 years old.

You can complete a LendingClub refinancing application online within a few minutes.

Before you apply for prequalification with LendingClub, it’s a good idea to check your credit and compare other loan offers. If your credit has improved, refinancing could result in a lower interest rate. But if your credit has stayed the same or gotten worse, getting a lower interest rate could be difficult. Shopping around can help you find the best loan rate and terms for your needs. Read our article on how to refinance a car loan to learn more about the process.

Not sure if LendingClub auto refinancing is right for you? Consider these alternatives.

If you’re looking to refinance your auto loan, LendingClub auto refinancing offers competitive starting interest rates and a simple process to apply for prequalification. But if your vehicle or auto loan doesn’t meet LendingClub’s refinancing requirements or you want to explore other options, here are a couple of alternatives to consider.

About the author: Ashley Chorpenning is a personal finance writer and content creator. In addition to being a contributing writer at Credit Karma, she writes for solo entrepreneurs and Fortune 500 compani… Read more.