Refinance Car Loan Guide: Compare Rates & Lenders
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Can you refinance a car loan?
Yes, it’s possible to refinance a car loan in Australia. Borrowers usually refinance if they’re looking for a better interest rate, which not only reduces the total amount of interest over the term of the loan, but also decreases their repayments.
Refinancing a car loan is an option for borrowers who want access to better loan features, such as the ability to make extra repayments without incurring early repayment fees.
How does car loan refinancing work?
To refinance your car loan, you’ll follow much the same process you went through when you got your loan originally.
Typically you’ll be refinancing with a different lender. Once you’re approved, the new lender will do a lot of the work for you.
They will request a payout letter from your current lender. They’ll then pay out your old loan and start you on your new one,ideally with lower regular repayments or improved loan terms, or both.
Among borrowers looking to refinance their car loan, the average remaining loan balance is more than $30,000, according to Money.com.au's data. These borrowers stand to make significant savings by refinancing to a better deal.
5 steps to refinance your car loan
Here are the five main steps involved when refinancing a car loan:
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Consider your options: Compare car loans based on eligibility criteria, interest rates, regular repayment amount, terms and fees.
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Check if your current lender will negotiate: If you’ve found better car loan deals elsewhere, check if your current lender will match them. If not…
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Make an application: Just like you did originally, except this time with a new loan and lender.
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The new lender repays your existing car loan: Once you’re approved, your new lender will settle your old loan by paying off the loan balance.
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Start your new car loan: Now that your old balance is settled, you begin making regular repayments on your new (hopefully better) loan.
Best refinance car loan interest rate comparison
Compare a selection of used car loan interest rates in Australia that may be available for car loan refinancing, with ranges based on the borrower's credit score and other factors. The table is sorted by lowest comparison rate.
Lender | Harmoney |
|---|---|
| Interest rate | 5.66% p.a. - 20.07% p.a. |
| Comparison rate* | 6.45% p.a. - 20.98% p.a. |
Lender | Westpac (used vehicles up to 7 years old) |
| Interest rate | 5.49% p.a. - 12.49% p.a. |
| Comparison rate* | 6.70% p.a. - 14.14% p.a. |
Lender | Now Finance |
| Interest rate | 6.75% p.a. - 21.65% p.a. |
| Comparison rate* | 6.75% p.a. - 21.65% p.a. |
Lender | Great Southern Bank (used vehicles up to 7 years old) |
| Interest rate | 6.49% p.a. - 15.04% p.a. |
| Comparison rate* | 6.86% p.a. - 15.44% p.a. |
Lender | Liberty Financial |
| Interest rate | 6.52% p.a. - 19.19% p.a. |
| Comparison rate* | 6.95% p.a. - 20.77% p.a. |
Lender | Moneyplace |
| Interest rate | 6.52% p.a. - 19.19% p.a. |
| Comparison rate* | 6.95% p.a. - 20.77% p.a. |
Lender | ING |
| Interest rate | 6.89% p.a. - 18.99% p.a. |
| Comparison rate* | 7.10% p.a. - 19.23% p.a. |
Lender | OMM |
| Interest rate | 6.57% p.a. - 18.99% p.a. |
| Comparison rate* | 7.19% p.a. - 21.78% p.a. |
Lender | Loans.com.au |
| Interest rate | 6.09% p.a. - 12.79% p.a. |
| Comparison rate* | 7.21% p.a. - 13.90% p.a. |
Lender | Bank of Melbourne (used vehicles up to 7 years old) |
| Interest rate | 6.49% p.a. - 12.99% p.a. |
| Comparison rate* | 7.61% p.a. - 14.06% p.a. |
Lender | BankSA (used vehicles up to 7 years old) |
| Interest rate | 6.49% p.a. - 12.99% p.a. |
| Comparison rate* | 7.61% p.a. - 14.06% p.a. |
Lender | St.George (used vehicles up to 7 years old) |
| Interest rate | 6.49% p.a. - 12.99% p.a. |
| Comparison rate* | 7.61% p.a. - 14.06% p.a. |
Lender | Plenti |
| Interest rate | 7.19% p.a. - 12.49% p.a. |
| Comparison rate* | 7.75% p.a. - 13.08% p.a. |
Lender | Macquarie Bank |
| Interest rate | 6.40% p.a. - 10.82% p.a. |
| Comparison rate* | 7.86% p.a. - 10.82% p.a. |
Lender | Commbank (used vehicles up to 7 years old) |
| Interest rate | 5.99% p.a. - 21.99% p.a. |
| Comparison rate* | 7.90% p.a. - 14.34% p.a. |
Lender | NAB |
| Interest rate | 6.99% p.a. - 20.49% p.a. |
| Comparison rate* | 7.91% p.a. - 21.33% p.a. |
Lender | NRMA |
| Interest rate | 7.29% p.a. - 16.99% p.a. |
| Comparison rate* | 8.00% p.a. - 17.77% p.a. |
Lender | RACV |
| Interest rate | 7.29% p.a. - 15.99% p.a. |
| Comparison rate* | 8.00% p.a. - 16.76% p.a. |
Lender | ANZ |
| Interest rate | 7.49% p.a. - 19.99% p.a. |
| Comparison rate* | 8.18% p.a. - 20.58% p.a. |
Lender | Society One |
| Interest rate | 8.20% p.a. - 25.64% p.a. |
| Comparison rate* | 8.27% p.a. - 25.64% p.a. |
Lender | Wisr |
| Interest rate | 9.09% p.a. - 17.24% p.a. |
| Comparison rate* | 10.62% p.a. - 16.77% p.a. |
Lender | Latitude Financial |
| Interest rate | 9.49% p.a. - 29.99% p.a. |
| Comparison rate* | 10.93% p.a. - 31.83% p.a. |
Lender | Fair Go Finance |
| Interest rate | 15.95% p.a. - 27.99% p.a. |
| Comparison rate* | 26.69% p.a. - 36.32% p.a. |
| Lender | Interest rate | Comparison rate* |
|---|---|---|
Harmoney | 5.66% p.a. - 20.07% p.a. | 6.45% p.a. - 20.98% p.a. |
Westpac (used vehicles up to 7 years old) | 5.49% p.a. - 12.49% p.a. | 6.70% p.a. - 14.14% p.a. |
Now Finance | 6.75% p.a. - 21.65% p.a. | 6.75% p.a. - 21.65% p.a. |
Great Southern Bank (used vehicles up to 7 years old) | 6.49% p.a. - 15.04% p.a. | 6.86% p.a. - 15.44% p.a. |
Liberty Financial | 6.52% p.a. - 19.19% p.a. | 6.95% p.a. - 20.77% p.a. |
Moneyplace | 6.52% p.a. - 19.19% p.a. | 6.95% p.a. - 20.77% p.a. |
ING | 6.89% p.a. - 18.99% p.a. | 7.10% p.a. - 19.23% p.a. |
OMM | 6.57% p.a. - 18.99% p.a. | 7.19% p.a. - 21.78% p.a. |
Loans.com.au | 6.09% p.a. - 12.79% p.a. | 7.21% p.a. - 13.90% p.a. |
Bank of Melbourne (used vehicles up to 7 years old) | 6.49% p.a. - 12.99% p.a. | 7.61% p.a. - 14.06% p.a. |
BankSA (used vehicles up to 7 years old) | 6.49% p.a. - 12.99% p.a. | 7.61% p.a. - 14.06% p.a. |
St.George (used vehicles up to 7 years old) | 6.49% p.a. - 12.99% p.a. | 7.61% p.a. - 14.06% p.a. |
Plenti | 7.19% p.a. - 12.49% p.a. | 7.75% p.a. - 13.08% p.a. |
Macquarie Bank | 6.40% p.a. - 10.82% p.a. | 7.86% p.a. - 10.82% p.a. |
Commbank (used vehicles up to 7 years old) | 5.99% p.a. - 21.99% p.a. | 7.90% p.a. - 14.34% p.a. |
NAB | 6.99% p.a. - 20.49% p.a. | 7.91% p.a. - 21.33% p.a. |
NRMA | 7.29% p.a. - 16.99% p.a. | 8.00% p.a. - 17.77% p.a. |
RACV | 7.29% p.a. - 15.99% p.a. | 8.00% p.a. - 16.76% p.a. |
ANZ | 7.49% p.a. - 19.99% p.a. | 8.18% p.a. - 20.58% p.a. |
Society One | 8.20% p.a. - 25.64% p.a. | 8.27% p.a. - 25.64% p.a. |
Wisr | 9.09% p.a. - 17.24% p.a. | 10.62% p.a. - 16.77% p.a. |
Latitude Financial | 9.49% p.a. - 29.99% p.a. | 10.93% p.a. - 31.83% p.a. |
Fair Go Finance | 15.95% p.a. - 27.99% p.a. | 26.69% p.a. - 36.32% p.a. |
Top reasons to refinance your car loan
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Reduce repayments
Obtain a lower interest rate on a different loan with the same term. This will reduce the regular payment amount and the total interest paid over the loan.
2
Extend the loan term
You can also reduce your repayments by extending your loan term. Just bear in mind that this may end up costing you more in interest overall.
3
Your credit score has improved
Your credit score plays a major part in determining what your car loan interest rate will be. If your credit score has improved since you first took out your loan, you may be able to take advantage by refinancing your car loan to a cheaper rate.
4
Refinance your car loan balloon payment
Some car loans include a balloon payment, which is a large, one-time payment at the very end of your loan that reduces the regular payment. When the balloon payment is due, some borrowers choose to refinance it. This means taking out a new loan and repaying the balloon amount in instalments rather than a single large payment.
“Refinancing is a real option if you have had your current car loan for at least 12 months and you’re on a higher rate. Refinancing to a lower rate should make your repayments lower and could mean big savings over the remaining life of the loan. Just be mindful of switching fees to make sure refinancing is going to be worth it.”
Shaun McGowan, Loans Expert
How long does refinancing your car loan take?
Most lenders have fast application and approval processes. This means your car loan refinance could be completed in a couple of days.
Depending on how strong your application is (i.e. you have a good credit score), some lenders may approve within 24 hours.
Having documents like payslips and bank statements ready for your new lender to check can help speed up the process.
How soon can you refinance a car loan?
In general, it’s best to wait 12 months before refinancing a car loan.
For example, you might have needed to accept a high car loan interest rate initially because you had a default on your credit report. After 12 months of making your payments on time, you may be able to get a much better rate with a new lender.
When you refinance a car loan, it’s important to get the timing right. Applying too soon could mean being declined, while leaving it too late might mean the possible savings won’t be worth it.
Is refinancing a car loan expensive?
Not necessarily. In fact, refinancing to a lower interest rate could save you thousands in interest and fees.
But there are costs to factor in, including:
- Early payout fees on your current loan
- Application or establishment fees on your new loan
You’ll need to check your current loan documents and the new lender’s fees to see what you’ll be charged for switching. Then weigh up to see if the savings is worth it overall.
Use a car loan calculator
Check to see if refinancing to a new car loan is worth it by using our free car loan calculator.
CALCULATE COSTSCALCULATE COSTSCar loan refinance example
These are sample loan rates and fees. Actual rates and fees will be determined by the lender based on your credit score and other factors specific to your application.
| Existing car loan | New car loan | |
|---|---|---|
Loan amount | $30,000 | $30,000 |
Remaining loan term | 4 years | 4 years |
Interest rate | 12% | 8% |
Switching cost | N/A | $750 |
Monthly repayment | $790 | $732 |
Total to repay | $37,921 | $35,155 |
Saving (including switching costs) | N/A | $2,016 |
Ready to refinance your car loan?
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GET STARTEDGET STARTEDFAQs about refinancing car loans in Australia
Can I refinance a bad credit car loan?
You can usually refinance a bad credit car loan to get a lower interest rate. If you’ve made consistent payments for 12 months or more on your existing loan, your credit score may have improved.
If this is the case, you may be eligible to refinance with lenders that were off limits when you first obtained your loan.
Does refinancing a car loan hurt your credit score?
Applying for a new loan, which is essentially what you’re doing when you refinance, has the potential to impact your credit score in the short term. This is because new loan applications are recorded on your credit report.
However, if you avoid applying for multiple loans in a short space of time, refinancing your loan should not negatively impact your credit score in the longer term.
Refinancing to a better deal could even improve your credit score over time as it could make your repayments more manageable.
Is it worth refinancing a car loan to a lower interest rate?
To find out if refinancing to a lower interest rate is worth it, you’ll need to consider the following:
- How much lower is the refinance rate compared to your current rate? The bigger the difference, the more likely it is you will save overall.
- How long is there left on your loan? The longer there is remaining, the more you will save with a lower interest rate.
- What is the remaining balance? If there is only a small balance remaining, the interest savings may not be enough to outweigh the switching costs.
- What are the switching costs? You'll need to factor these in when calculating whether the interest savings make the refinance worth your while overall.
How many times can you refinance a car loan?
You can refinance a car loan as many times as you’d like, but remember to consider how it might affect your credit history. Timing is key. You may wish to refinance if:
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Your credit score has improved
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Interest rates have dropped
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You want lower repayments
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You’re unhappy with your current lender
Can you refinance a car balloon payment?
Some lenders allow you to refinance your car balloon payment, but keep in mind that while you’ll avoid a lump sum payment, you’ll likely incur interest on the refinanced amount. Evaluate your options carefully to see if this is the best option for your financial situation.
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Where to next? Read our other car loan guides to understand more about your options for financing your next car.
Written by
Senior Finance Writer
Jared Mullane
Reviewed by
Editor
Sean Callery
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