Refinance car loan

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Refinance car loan
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Our mission

Money.com.au (Money) is on a mission to enable Australian consumers to enjoy an online shopping experience for financial products, starting with personal loans.

We believe that by providing you with fair & transparent choice, we will achieve our mission, and help more Australians get better deals (more for your money).

Putting you first means:

  • We only show you loans you qualify for, ranked by the lowest repayment

  • We show you “apples with apples” loan comparisons (by simplifying & standardising information)

  • We do not accept paid endorsements or promote lenders based on commission.

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Compare car loan rates

Loan Amount
Loan Terms
Interest Rates
(APR)
Comparison Rates
(APR)
$5,000 - $150,000
36 - 60 months
3.97 - 4.67% 4.51 - 5.22% Get your rate
$5,000 - $50,000
18 - 84 months
5.95 - 17.95% 5.95 - 17.95% Get your rate
$5,000 - $50,000
1 - 5 years
6.99 - 20.49% 6.99 - 22.06% Get your rate
$2,000 - $50,000
24 - 60 months
19.95 - 28% 35.97 - 47.66% Get your rate
$5,000 - $63,000
3 - 7 years
--- --- Get your rate

Key features of car loan refinance:

  • Borrow from $5,000 to $100,000

  • Fixed interest rates

  • Repayments to suit your budget

  • Terms from 1 to 7 years (most common is 5 years)

  • Secured & unsecured options

Who is eligible for car loan refinance?

  • Australian Permanent Residents (& some visa holders)

  • Must be over the age of 18

  • Earn a minimum of $25,000 a year

  • Hold a valid provisional or full driver licence

Learn more about refinancing car loans

What is car loan refinance?

Refinancing a car loan allows you to borrow money from a lender to repay an existing car loan or balloon payment. Car loan refinance is often used to secure lower interest rates or renegotiate the terms of an existing car loan on to a longer term.

Car loan refinance works in a similar way to a secured car loan. You apply for a new loan with a new lender, and use the funds to repay the balance of your existing car loan. You will then continue to make regular repayments on the new loan until the principal balance plus interest is repaid.

Here is an example:

  • Your current car loan is $30,000 with an interest rate of 10% over a five-year term

  • Estimated monthly repayments are $637.41

  • Regular repayments reduce your principal to $25,000

  • You refinance your car loan with another lender for the same term at a rate of 7%

  • The new lender releases $25,000 in funds to repay the existing loan

  • Your new car loan is $25,000 with an interest rate of 7% over a five-year term

  • Estimated monthly repayments are $495.03

By refinancing, you have potentially saved over $6,000 in repayments.

To find the best offers, it’s worth spending some time comparing available deals from multiple lenders. You can do that simply by using our smart-form.

Compare refinance offers for car loans

If you are refinancing your car loan with a new lender, you will need to compare offers to find the most suitable arrangement. When researching lenders and reviewing various offers, you may wish to consider:

  • The advertised interest rate and comparison rate

  • Minimum and maximum loan terms

  • Fixed or variable interest rates

  • Extra repayments or early repayment options

  • Upfront or ongoing fees

If you are using our smart form, the advertised rate and comparison rate will be clearly displayed on your personalised results screen, which you can use to quickly compare and select the deal you think is best.

When lenders assess your application for a new car loan, they’ll assign your new interest rate based on a number of factors. If you’re refinancing a car loan for a better rate, consider the following when making your application:

  • The age of the vehicle

  • The type of vehicle

  • The amount you wish to borrow

  • The length of your loan

  • Your credit history

  • Your net income

  • If you own a property

If you do not find any available offers to compare, you can work with a vehicle finance broker to assist in finding you a suitable deal and completing your application.

Brokers operate all across Australia — whether you need to refinance your car loan in Canberra, Newcastle, Sydney, Melbourne, Brisbane, Perth, or Adelaide, you'll be able to find one who can help you assess a range of suitable options specific to your financial circumstances.

Money Tip: Review your current loan documents to understand any early exit or early repayment fees which may affect the amount you would save through refinancing.

How to refinance your car loan

Refinancing a car loan can help borrowers save considerable amounts of money. While the most common reason may be simply to secure a lower interest rate, there are many situations where it can be highly beneficial.

Car loan refinance can be used to:

  • Choose a more suitable lender

  • Extend the terms of a car loan

  • Negotiate a lower interest rate

  • Reduce total repayments

  • Reduce regular instalment amounts

  • Restructure a residual payment to conserve cash flow

  • Receive a better rate on a bad credit car loan

  • Add a guarantor to a new car loan agreement

When refinancing your car loan, you will often be best-placed to renegotiate a more favourable agreement if you have made repayments for at least 12 months. This is important for a few reasons:

  • You display an ability to make regular repayments over the full course of a year

  • Your vehicle will have a minimum amount of deprecation

  • You will have allowed a considerable amount of time for your credit rating to improve

Where a car has considerable depreciation, and the value of the vehicle is less than the amount still owed to the lender, you may find difficulty in gaining approval.

Money.com.au aims to clear up the confusion around rates and approval, so we can provide the best consumer experience possible. We only show you real, personalised rates from lenders who can give you approval on the loan.

No hidden fees, no inflated rates, no stress, and no impact on your credit score.

Money Tip: Make sure you fully understand any early-repayment fees, exit fees, and application fees before committing to refinancing your car loan.

3 reasons to refinance your car loan

1. Refinancing a car loan to reduce repayments

There are a few ways to reduce repayments through car loan refinance. The most popular is to negotiate lower car loan interest rates, which will reduce both the regular repayment amount and the total interest paid over time. Borrowers can also reduce repayments by extending their loan term or selecting a loan with fewer fees.

2. Refinance your car loan with a better credit score

If you apply for a bad credit car loan, you will most likely be paying much higher rates than a standard vehicle loan. If you can commit to regular repayments on a car loan, you may be able to improve your credit score and receive a more generous rate.

If you are considering bad credit refinance:

  • Request a copy of your credit score to see how your repayments have improved your credit rating

  • Ensure you have made full and on-time repayments throughout the history of the existing loan

  • Compare lenders to find the best rate for your improved credit score

Lenders assess applications based on the risk presented by the borrower. A poor credit rating is often associated with high-risk borrowers; improving your credit score could lower your risk level and the interest rate applied to your loan.

3. Refinance your car loan balloon payment

Personal car loans and business car loans can often include a balloon (residual) payment, which helps reduce regular repayment amounts at the cost of a significant, one-time payment made at the end of the term.

However, some lenders may provide an option to refinance the remaining balloon amount into a new loan, allowing you to conserve cash flow and repay the residual in regular instalments.

Here’s an example of how refinancing a balloon payment works:

  • Your car loan is $30,000 with an interest rate of 10% over a five-year term

  • The loan includes a balloon payment of 25% ($7,500)

  • Repayments are calculated on a principal of $22,500

  • Monthly repayments are $478

  • The new lender releases $25,000 in funds to repay the existing loan

  • At the end of the term, you choose to refinance the balloon amount

  • Your new car loan is $7,500 with an interest rate of 8% over a three-year term

  • Monthly repayments are $176

Keep in mind that you will continue to pay interest when refinancing your balloon payment. In the example above, repaying the balloon payment in full would save $711 of interest.

Money Tip: You will generally need to demonstrate 12 months of consistent, stable repayments to refinance a bad credit car loan.

How to qualify and apply icon

Applying for car loan refinance

To refinance your car loan in Australia you'll need to:

  • Consider your options — You can compare car loans to ensure you meet eligibility criteria and understand the rates, terms, and any initial or ongoing fees associated with your new loan.

  • Calculate your car loan repayments — Use a car loan calculator to quickly estimate repayments on your new car loan to find the most suitable payment schedule and instalment amount for your circumstances.

  • Apply for car loan refinancing — There are many ways to apply for a car loan. Non-bank lenders will usually offer an online application process with fast approval.

  • Repay your existing car loan — If you are approved, funds will be released under your new car loan agreement, which you will use to repay your existing loan and any exit or early repayment fees.

  • Repay your new car loan — Once you’ve repaid the balance on your existing car loan, you will continue to make regular repayments on your new loan.

If you use our smart form and find a lender you want to apply with, you will be directed to the lender’s website and need to supply all documentation as you normally would when applying for a car loan, which may include:

  • Proof of identity - i.e. passport or driver licence

  • Proof of income — i.e. such as copies of your tax return or recent payslips

  • Proof of your assets — i.e. any shares, vehicles, or property

  • Details of any current debts and expenditure — i.e. rent/mortgage, other loans and credit card details

  • Providing your bank statements

Money Tip: You can only refinance a car loan if the vehicle is currently under finance. Alternatively, you may use a vehicle you own as collateral on a secured personal loan.

Summary icon

Summary

Refinancing a car loan is a form of debt refinance, generally used to secure a lower interest rate on a new loan than the rate applied to an existing loan. This can be done by changing lenders, or reducing your borrower risk profile by committing to regular repayments.

Refinancing your car loan:

  • Can help secure a lower interest rate

  • Can reduce repayment amounts

  • Can refinance a balloon payment into a term loan

  • Can be used to refinance a bad credit car loan at a lower rate

  • Longer loan terms may see you pay a greater amount of interest

  • Possible exit fees and application fees

  • Requires research to compare offers and find the most suitable

How much is the car you are looking to purchase?

Here are the most popular questions people refinancing car loans are asking:

Can I refinance a car loan with a new lender?

You can choose to refinance your car loan with another lender if you are unhappy with your current lender. Often, it’s best to speak with your current lender before applying with another, as they may be able to offer you a personalised rate offer.

How soon can you refinance a car loan?

In general, you will need to wait 12 months before refinancing a car loan. This allows a lender to assess your repayment ability and risk level, and ensures your credit score isn’t affected by multiple finance applications in a short space of time.

Is refinancing a car loan expensive?

The point of refinancing is to reduce and lower your payments. It has the potential to save you thousands by reducing the amount of interest you are required to pay. However, there may be early repayment fees and application fees involved in the refinancing process, and you will need to factor these into your decision before applying.

Can I refinance a bad credit car loan?

Yes, you can refinance a bad credit car loan to negotiate a lower rate. By making consistent payments for more than 12 months of your existing loan, you can improve your credit rating and refinance to a lower rate. Carefully research your options before applying, as declined applications may affect your credit score.