Refinancing your car loan can be a simple way to take control of your finances – whether you’re looking to lower your repayments, reduce interest, or get a loan that better fits your situation.
But when does it actually make sense to refinance a car loan, and what should you watch out for?
Here’s what you need to know to make an informed decision.
What Does It Mean to Refinance a Car Loan?
Refinancing involves replacing your existing car loan with a new one – either from the same lender or a different one. The new loan pays off the original, and you start making repayments on the new terms.
Many people refinance to take advantage of better rates or to adjust their repayment period.
Reasons to Consider Refinancing
Lower Interest Rates
If your credit score has improved or the market has changed since you first took out your loan, you might qualify for a lower rate.Reduced Monthly Repayments
Extending your loan term can lower your monthly repayments – giving you more breathing room in your budget.Change in Financial Circumstances
Lost income, new expenses, or simply wanting to free up cash flow could be reasons to refinance.Switch to a Better Lender
If you’re unhappy with your current lender’s service or fees, refinancing could mean a better overall experience.
What to Consider Before Refinancing
Loan Fees or Exit Costs
Check if your current loan has early exit fees, which may reduce the benefit of switching.Loan Term Reset
If you extend your loan period, you could end up paying more interest overall – even if the rate is lower.Vehicle Age or Value
Lenders often have limits on how old your vehicle can be when refinancing. If your car has significantly depreciated, it may affect your options.
Can You Refinance with Bad Credit?
Yes – although your options may be more limited. At Finance One, we understand that your credit history doesn’t tell the full story.
We offer flexible bad credit car loans and refinancing options for Australians who may have had defaults, missed payments or been declined elsewhere.
If you have regular income and a realistic budget, we may be able to help.
Use a Car Loan Calculator
Before refinancing, use our car loan calculator to estimate your potential repayments and compare them with your current loan. It’s a great way to see if refinancing could save you money.
Final Thoughts
Refinancing your car loan can be a smart move – but only if the numbers work in your favour. It’s important to weigh the potential savings against any fees and be clear on your long-term goals.
If you’re unsure where to start, chat with our team or explore our car loan options online. We’re here to help you make the right decision for your situation – not just today, but down the road too.
Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information.
