Car Loan Refinance

Are you looking to get a better deal on your current car loan? Consider refinancing your car loan and save
No obligation. It won't affect your credit score.

Last updated on April 21st, 2022 at 03:33 pm by Bill Tsouvalas

Car loan refinance

Gain better car loan rates

Did you know you can refinance your car loan? If the market has changed or your credit has improved, it makes a lot of sense to consider car loan refinancing. Unlike refinancing a home loan, you can refinance your current car loan with a variety of options.

Car loan refinancing makes sense if you once had bad credit and are now in a better credit category. Refinancing with a lower interest rate may save you thousands of dollars throughout the life of the loan.

Car loan refinancing may make you eligible for a new car if you are willing to trade in your old one. One common way of refinancing is to pay out the existing loan with a trade-in.

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The team at Savvy can advise you if a car loan refinance is the best option for you. In some cases, your current car loan may penalise you for exiting your car loan early. However if that’s not the case, you could be saving money not only in interest rates, but fees, charges and loading on timed repayments. A new car loan could also give you access to features your existing car loan doesn’t have.

Our financial professionals can guide you through the process and determine whether a car loan refinance is the best move. Sometimes the drawbacks outweigh the advantages in refinances, especially due to differing loan terms, exit fees or setup costs.

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The steps toward refinancing your car

Pros & Cons of refinancing your car loan


You could save money in repayments and interest by refinancing your car loan.

A new lender could offer you a lower interest rate than your current lender.

You may want to spread out your repayments over a longer term, reducing your repayments.

Refinancing a car loan may also give you the opportunity to remove a guarantor.

You may want to add a balloon payment to your loan to reduce regular repayments.

You can change your loan type from secured to unsecured or variable to fixed or vice versa.


Refinancing a car may be time consuming, as you’ll need to apply as you did the first time.

You may end up paying more in exit and entry fees if you refinance.

You may accumulate more interest if you extend your loan term.

Taking out a variable rate loan may make budgeting more difficult, especially if interest rates rise.

Common car loan refinancing questions

How does a car refinancing work?

Car refinancing is a method of changing your loan provider to another, ideally with a lower interest rate and repayment. Your new loan pays out your previous bank or lender and you continue paying off the car loan as normal.

Can I refinance my car loan with a mortgage?

It is technically possible – you could pay out your car loan with an equity release or line of credit and pay off the loan as part of your mortgage. This may attract exit fees and higher interest, as mortgage terms are much longer than consumer car loan terms.

I just signed on to a car loan. Can I refinance my car loan?

If you have just taken out a car loan – within the last year or two – it is inadvisable to refinance your car loan. Making another credit inquiry in such a short time may damage your credit score and cancel out any potential savings you could make.

Can I change my car loan term?

Yes – if approved for a refinancing loan, you will be able to select your term length.

Can I change from fixed to variable rates?

Yes – if your lender offers a choice of variable rates, you can select that option.

Will I have to pay an exit fee or entry fee?

Some loans will come with early payment fees or early termination fees, while your proposed refinance may come with establishment fees. Talk to your lender or broker to see if you will need to pay any of these fees.

I have a bad credit car loan but my credit has improved. Can I refinance?

Yes – and if your credit score has improved, you may save money as you’re offered more competitive interest rates. This varies depending on your situation.

Do I still need to get all my documents for a car loan refinance, like in the original car loan?

Yes. You are taking out a new loan and a lender will need to conduct a credit check, identity checks, and look at bank statements and pay slips.

How much would a car refinance save me?

This varies from loan to loan. You’ll need to figure this out using a car loan calculator and directly compare your current loan interest rate with your new loan. You’ll also have to factor in any exit or entry fees as part of the package.

My car is over ten years old, can I refinance?

It is possible, but much harder. Lenders are reluctant to finance cars with low residual value.