12 mins read 
Key takeaways
- You can refinance a car loan if you have student loans. Student debt isn’t an automatic disqualifier.
- Lenders usually look at your debt-to-income ratio, credit history, income, vehicle value and current loan details.
- Student loans can affect refinancing if they raise your monthly debt payments or hurt your credit.
- Refinancing may help if it lowers your APR, reduces your monthly payment or gives your budget more breathing room.
- A lower monthly payment isn’t always the same as a cheaper loan, so compare the APR, term and total interest before choosing an offer.
Student loans can take up a big part of your monthly budget. So can a car payment. If you’re trying to manage both, you may be wondering whether student loan debt can stop you from refinancing your auto loan.
The good news: you can refinance a car loan if you have student loans. Lenders don’t usually look at student debt by itself and say no. They’re more likely to look at how that debt affects your overall budget, credit history and ability to make the new car payment.
That means refinancing could still be an option, especially if your credit has improved, your current car loan has a high APR or you’re trying to lower your monthly payment while staying on track with student loan repayment.
Can you refinance a car loan if you have student loans?
You can refinance a car loan with student loans. Student loan debt doesn’t automatically keep you from qualifying.
What matters more is whether a lender believes you can comfortably afford the new loan. To figure that out, lenders may review things like:
- Your income.
- Your monthly debt payments.
- Your credit history.
- Your current car loan balance.
- Your vehicle’s value, age and mileage.
- Your payment history on your current auto loan.
- Your student loan status.
If your student loans are current and your credit is in good shape, they may not be a major problem. But if your student loan payments are high, your loans are delinquent or your credit score has dropped, refinancing may be harder or more expensive.
How student loans affect auto refinancing
Student loans usually affect auto refinancing in two main ways: your debt-to-income ratio and your credit history.
Student loans can raise your debt-to-income ratio
Your debt-to-income ratio, or DTI, is the percentage of your monthly income that goes toward debt payments. Lenders use it to estimate how much room you have in your budget.
Here’s a simple example:
| Monthly budget item | Amount |
|---|---|
| Gross monthly income | $5,000 |
| Student loan payment | $350 |
| Current car payment | $525 |
| Credit card minimums | $150 |
| Total monthly debt payments | $1,025 |
| Debt-to-income ratio | 20.5% |
In this example, the borrower’s monthly debt payments are $1,025. Divide that by $5,000 in gross monthly income, and the DTI is 20.5%.
A lower DTI can make it easier to qualify for financing. A higher DTI doesn’t always mean you’ll be denied, but it may limit your options or affect the rate you’re offered.
If you’re trying to estimate whether refinancing could lower your monthly payment, Caribou’s auto refinance calculator can help you compare a potential new payment with your current one.
Student loan payment history can affect your credit
Your student loan payment history can also affect your refinance options.
If you’ve made student loan payments on time, that may help show lenders that you can manage debt responsibly. But missed student loan payments, delinquency or default can hurt your credit and make it harder to qualify for a good refinance offer.
That matters more now because student loan delinquencies have started showing up on credit reports again after the pandemic-era reporting pause. The New York Fed noted that many borrowers saw credit score drops once delinquent student loans were reported again.
If you’re worried about your credit, it may help to understand whether refinancing a car can hurt your credit score before you apply.
How lenders may view different student loan situations
Not all student loan debt looks the same to a lender.
| Student loan situation | How it may affect auto refinancing |
|---|---|
| Current and paid on time | May support a stronger credit profile |
| High monthly payment | Can raise DTI and reduce approval odds |
| Delinquent or in default | Can hurt credit and make refinancing harder |
| In deferment or forbearance | Lender may still consider the expected payment |
| On an income-driven repayment plan | A lower required payment may help DTI, depending on lender review |
The main point: lenders usually care less about the fact that you have student loans and more about whether those loans are manageable.
When refinancing your car loan may help
Refinancing can make sense if it improves your car loan without making your overall debt situation worse.
It may help if:
- Your credit has improved since you got your current auto loan.
- You qualify for a lower APR.
- Your current payment is too high for your budget.
- You want to change your loan term.
- You’re trying to free up monthly cash while keeping your student loans current.
- You want to compare offers before committing to a new loan.
For borrowers juggling student loans and a car payment, even a modest monthly savings can help. You might use the extra cash for student loan payments, an emergency fund, insurance, car maintenance or other bills.
Just make sure the savings are real. A lower payment can help your monthly budget, but it may cost more overall if the new loan stretches your repayment term too far. If you’re not sure how loan length changes the total cost, this guide on how loan terms affect the cost of credit can help.
When refinancing might not be the right move
Refinancing isn’t always the right move, even if you qualify.
It may not help if:
- Your new APR is higher than your current APR.
- You have to extend the loan too long to lower the payment.
- Fees or added costs wipe out your savings.
- You’re close to paying off the car.
- You owe more than the vehicle is worth.
- Your credit recently dropped and you may qualify for a better offer later.
Be especially careful if you’re upside down on your current car loan. That means you owe more than the car is worth. Refinancing may still be possible in some situations, but it can be harder to save money. Before moving forward, check whether you’re upside down on your car loan and compare your payoff amount with your vehicle’s value.
Should you refinance your car loan or your student loans first?
It depends on which loan is costing you more and which one gives you the safest path to savings.
Refinancing your car loan may make sense if your auto loan has a high APR, your payment is straining your budget or your credit has improved since you bought the car. It may also be a simpler way to lower one monthly payment without changing your student loan benefits.
Student loan refinancing is different, especially if you have federal student loans. Refinancing federal student loans with a private lender could mean giving up federal protections, repayment plans or forgiveness options. That may not be worth it for every borrower.
A practical way to compare:
| Question | Why it matters |
|---|---|
| Which loan has the higher APR? | The higher-rate loan may offer more savings potential. |
| Which payment is harder to afford? | Lowering that payment may help prevent missed payments. |
| Would refinancing change federal student loan benefits? | Losing protections could be risky. |
| Would the new loan cost more over time? | A lower payment can still mean more total interest. |
If your goal is quick monthly breathing room, auto refinancing may be worth checking first. If your goal is long-term debt reduction, compare the total cost of both options before deciding.
How to refinance a car loan when you have student loans
Here’s a simple way to approach it.
1. Gather your current auto loan details
Start with your current loan. You’ll want to know:
- Current APR.
- Monthly payment.
- Remaining term.
- Payoff amount.
- Whether your lender charges a prepayment penalty.
- Your vehicle’s mileage and estimated value.
These details help you compare your current loan with potential refinance offers.
2. Calculate your monthly debt payments
Next, add up your monthly debt payments. Include your student loan payment, car payment, credit card minimums, personal loans and other required debt payments.
This helps you understand your DTI before a lender reviews your application.
Don’t use the amount you wish you could pay toward student loans. Use the required monthly payment. That’s the number most likely to matter when lenders review your budget.
3. Check your credit
Before applying, review your credit reports for anything that could hurt your offer. Look for missed payments, incorrect balances, duplicate student loan accounts or loans marked delinquent by mistake.
If something is wrong, try to fix it before applying.
If your credit isn’t where you want it to be, refinancing may still be possible, but your options could be more limited. Here’s more on whether you can refinance an auto loan with bad credit.
4. Decide what you want refinancing to do
Before comparing offers, choose your main goal.
Do you want to:
- Lower your monthly payment?
- Lower your APR?
- Pay less interest over time?
- Pay off the loan faster?
- Create more room in your budget for student loans?
This matters because the “best” offer depends on your goal. A longer term may lower your monthly payment, but it can increase total interest. A shorter term may save interest, but the payment may be higher.
5. Compare offers
Don’t compare offers by monthly payment alone. Look at the full picture:
- APR.
- Monthly payment.
- Loan term.
- Fees.
- Total interest.
- Total amount repaid.
If you’re checking rates, it can also help to understand the difference between auto refinance pre-qualification and pre-approval. Checking options may involve a soft credit pull first, while moving forward with a lender offer may involve a hard credit pull.
6. Make a plan for the savings
If refinancing lowers your monthly payment, decide what you’ll do with the extra money before it hits your account.
For example, if refinancing saves you $100 a month, you could:
- Put $50 toward student loans.
- Put $25 toward emergency savings.
- Keep $25 for gas, insurance or other monthly costs.
You don’t have to put every dollar toward debt. But having a plan helps make sure the savings actually improve your financial life.
What if your student loans are delinquent?
If your student loans are delinquent, refinancing your car loan may be harder. Delinquency can hurt your credit score, and lenders may see you as a higher-risk borrower.
That doesn’t always mean refinancing is impossible. But you may qualify for fewer offers, a higher APR or less favorable terms.
Before applying, consider whether you can get your student loans current, correct any credit report errors or wait until your credit improves. A stronger credit profile may help you qualify for a better offer later.
Can refinancing your car help you pay student loans faster?
It can, but only if you use the savings intentionally.
If refinancing lowers your car payment by $75 a month and you put that $75 toward your student loans, you may be able to make faster progress. But if the savings disappear into everyday spending, refinancing may only lower your car payment without improving your bigger debt picture.
That’s why it helps to decide whether your goal is cash-flow relief, debt payoff or both.
Bottom line
Student loans don’t automatically stop you from refinancing a car loan. What matters is how your student loans affect your monthly budget, credit history and ability to repay the new loan.
Refinancing may be worth exploring if it lowers your APR, reduces your monthly payment or helps you avoid falling behind on other bills. Just don’t focus only on the payment. Compare the APR, term and total cost so you know whether the new loan actually helps.
If you’re trying to lower your car payment while managing student loans, start by estimating your potential savings with Caribou’s auto refinance calculator.
FAQs: Student loans and auto refinancing
Can you refinance a car loan if you have student loans?
Yes. Student loans don’t automatically disqualify you from refinancing a car loan. Lenders usually look at your income, credit history, monthly debt payments, vehicle value and current loan details.
Do student loans count in debt-to-income ratio?
Yes. Your required monthly student loan payment can count toward your debt-to-income ratio. A higher monthly payment can make your DTI higher, which may affect approval odds or loan terms.
Can student loans stop me from refinancing my car?
They can make refinancing harder if they raise your DTI too much or if missed payments have hurt your credit. But having student loans by itself doesn’t mean you can’t refinance.
Can I refinance my car if my student loans are in deferment?
Possibly. Some lenders may still consider a future student loan payment when reviewing your application. It depends on the lender, your credit profile, income and other debt payments.
Can I refinance my car if I’m behind on student loans?
It may be harder. Late or delinquent student loan payments can hurt your credit and limit your refinance options. You may want to work on getting your loans current before applying.
Will refinancing my car hurt my credit?
It can cause a small, temporary dip if a lender runs a hard credit pull or when the new loan appears on your credit report. Checking refinance options with a soft pull doesn’t affect your score. You can read more about whether refinancing a car hurts your credit.
Should I refinance my car loan or student loans first?
Start with the loan that gives you the safest savings. If your car loan has a high APR or unaffordable payment, auto refinancing may be worth checking. Be more careful with federal student loans, since refinancing them with a private lender can mean losing federal benefits.
Is refinancing worth it if I only save a little each month?
It can be, but check the total cost. A small monthly savings may help your budget, but it may not be worth it if the new loan adds too much interest over time. Compare the APR, term, fees and total repayment amount before deciding.
