Most personal loan lenders don't allow refinancing an auto loan into an unsecured personal loan, and even when allowed, it rarely makes financial sense. Auto loans typically carry lower rates than unsecured personal loans because the vehicle serves as collateral. Refinancing a 7% auto loan into a 10% personal loan raises the rate. The exception: very high-rate auto loans (subprime, 14%+) for borrowers whose credit has substantially improved.
Why most lenders don't allow it. Personal loans are unsecured. The lender takes on more risk because there's no collateral to repossess if you default. Auto loans are secured, with the vehicle serving as collateral, which lets the lender offer a lower rate. Replacing secured debt with unsecured debt at a higher rate doesn't usually help the borrower or the lender.
The rate comparison.
Average new auto loan rate (mid-2025): 7.5-8.5% for 60-month terms across all credit tiers.
Average used auto loan rate: 8.5-11% across all credit tiers.
Subprime auto loan rates (under 660 credit): 12-22%.
Average personal loan rate for 720+ credit: 9-12%.
Average personal loan rate for 660-719 credit: 12-18%.
Personal loan rates are typically equal to or higher than mainstream auto loan rates. The only place where personal loans clearly beat auto loans is for borrowers with subprime auto loans whose credit has improved.
When refinancing makes sense.
Subprime auto loan at 16-22%. Borrower took out a high-rate auto loan during a credit struggle. Score has now improved to 700+. A 10% personal loan saves substantially.
Vehicle is mostly paid off. If you owe $5,000 on a vehicle worth $15,000, the vehicle's collateral value far exceeds the loan. The car is more useful as freed-up equity than as collateral. Some borrowers refinance the residual into a personal loan to free up the title; this only makes sense at competitive personal loan rates.
Vehicle is being sold. A personal loan to pay off the auto loan can let you sell the vehicle outright (no title-encumbrance issues, faster sale process). The personal loan then runs separately. This is rare and situational.
You want to consolidate auto loan and credit cards into one payment. Some borrowers find one payment easier to track than two. The math usually doesn't favor it (you raise the rate on the auto portion), but the simplicity benefit may be worth it for some borrowers.
Lenders that allow it.
Most credit unions: credit unions are typically the only consumer lenders that will refinance an auto loan into an unsecured personal loan, and only when the math makes sense for the borrower. PenFed, Navy Federal, and many local credit unions consider this.
Some online lenders for high-credit borrowers: SoFi, LightStream, and a few others may technically allow auto loan payoff with personal loan proceeds, but they don't market this as a consolidation option.
Specialty auto loan refinance companies: RoadLoans, OpenRoad, Capital One Auto, Caribou specialize in auto refinance (keeping the loan secured by the vehicle). They don't convert to unsecured.
The math example.
Borrower has a $15,000 auto loan at 16% (took out during a credit dip). Score has improved to 720. They have $20,000 in credit card debt at 22%.
Option A: Auto refinance at 8% (still secured), plus personal loan for credit cards at 10%.
Auto: $15,000 at 8% over 60 months, $304/month, $3,260 total interest.
Personal: $20,000 at 10% over 60 months, $425/month, $5,475 total interest.
Total monthly: $729. Total interest: $8,735.
Option B: Single personal loan combining both at 10.5%.
$35,000 at 10.5% over 60 months, $753/month, $10,168 total interest.
Difference: $1,433 more interest, $24/month higher.
Trade-off: simpler structure but more total cost.
Option A wins on math; Option B wins on simplicity. The right answer depends on which the borrower values.
What about a HELOC for both? A HELOC at 8.5% could pay both the auto loan and credit cards. Trade-off: home as collateral, variable rate, closing costs. Math is sometimes better than the unsecured combination but the home risk is real. See consolidate debt with a home equity loan.
Cash-out auto refinance as alternative. Some borrowers refinance the auto loan to a higher amount (cash-out) and use the difference to pay off other debts. The auto loan stays secured by the vehicle but the loan grows. See refinance auto loan to pay off credit cards.
Why personal loan refinance of auto rarely makes sense.
Auto loan rates are usually competitive. Even subprime auto loans cap below 22%; personal loans for the same borrower might be 18-30%.
Vehicle equity is illiquid in a personal loan. If you have $10,000 of equity in the car, an unsecured personal loan doesn't help you access it. A cash-out auto refinance does.
Origination fees on personal loans. 1-8% origination fees raise the effective cost. Auto refinance typically has minimal fees.
Auto refinance is the cleaner alternative. If you want a lower rate on your existing auto loan, refinance the auto loan itself (keeping it secured by the vehicle). Most auto refinancers offer rates 0.5-3 percentage points lower than personal loans for the same borrower.
The rare case where it works. Borrower with a 22% subprime auto loan, $5,000 remaining balance, vehicle worth $4,000 (underwater), credit improved to 700+. A $5,000 personal loan at 12% saves the rate and removes the lien risk. The math: $5,000 at 22% over 24 months remaining costs about $1,170 in interest; $5,000 at 12% over 24 months costs about $640. Saves $530 plus removes the secured-debt risk on a vehicle that's depreciated below the loan balance.
Most borrowers should refinance auto loans within the auto-secured market. Consolidating into a personal loan is for narrow cases where the rate spread is dramatic or you specifically want unsecured structure. Run the math both ways before deciding.