Car Loan Refinance

Whether you want a lower rate, extended term or access to extra features, refinancing your car loan allows you to make the switch to a new agreement.

Car Loan Refinance
Last Updated: 27/03/2025
Fact Checked

Car loan refinancing is the process of switching your current car loan to a new one. This can either be a different product with the same lender or a fresh loan with a new one. Essentially, you’re taking out a new car loan to pay out your old one and continuing your repayments on a different set of terms. Refinancing is done for a wide range of reasons and can change the cost, length and repayments of your loan.

Why might someone refinance their car loan?

There are many reasons why someone might refinance their car loan. Here are some of the main reasons why you might look to do so:

  • To secure a better rate: it goes without saying that locking in a lower interest rate will help you save. You might look to do this if the market has taken a turn towards lower interest rates or your financial position has improved over the course of your repayments.
  • To reduce their loan’s fees: in the same way, some lenders may offer lower fees than what you’re currently paying. Switching to a new loan with low or no fees could make your life easier.
  • To increase the length of their loan term: some people may opt to change their loan term. If your budget is tighter now, you may want to stretch your repayments out to reduce the monthly cost. This increases your overall loan cost, though.
  • To shorten their loan term: alternatively, if you’re in a better position now to pay off your loan sooner, you may look to refinance to a shorter term.
  • To remove or add a co-borrower or guarantor: many applicants sign up initially with another borrower on the contract or a guarantor. The only real way to remove or add them is to take out a new loan with fresh terms.
  • To add a residual payment: some lenders will give you the option to add a residual, or balloon, payment when taking out your loan. This is a lump sum to be paid at the conclusion of your agreement. They reduce the cost of your ongoing repayments but increase the interest you pay overall.
  • To access new features: you may simply wish to refinance your loan to gain access to new features that aren’t included in your current deal. This may be free additional payments, a redraw facility or something else.

Why apply for a car loan with Savvy?

100% online

There’s no need for messy paperwork with us. When you apply, you’ll be able to submit and sign all your forms electronically.

4.9-star customer service

The satisfaction our customers feel is clear when you see our impressive 4.9-star rating for our service on Feefo.

Helping Aussies since 2010

We’ve been helping Australians just like you find their ideal car loan package and save on interest and fees for 15 years.

No impact on your credit score

Our consultants will conduct a soft credit check when assessing your application, so your score won’t be affected.

40+ lending partners

We’re partnered with over 40 car loan providers nationwide, giving you more high-quality options to consider.

Competitive interest rates

We scour our lending panel for the lowest rates and match you with the most affordable deal available for your profile.

How to refinance your car loan with Savvy

  1. Submit your application online

    Firstly, tell us about yourself and the car loan you’re after. This will include information about your income, employment and current credit situation. You can also tell us about your car.

  2. Supply any required documentation

    We may require you to submit additional documents to help verify your details. This can be done online, where you’ll also be able to electronically sign other necessary documents such as your consent form.

  3. Review your options with your Savvy consultant

    Once we have all this information, we’ll compare offers from our lending partners based on your profile. Your consultant will be in touch to talk through the best car loan deal available and your indicative interest rate.

  4. Have your application prepared and submitted

    If you’re happy with the loan we’ve picked out, your consultant will prepare your formal application for submission. All that’s left for you is to sit back and wait!

  5. Receive formal approval and settle the deal

    Formal approval is possible as soon as 24 hours after your application is submitted. After you’ve signed everything, we’ll organise the settlement of your new loan.

  6. Pay off your old car loan

    Your existing car loan can now be paid off with your new loan. This is usually done by your new lender, so you won’t have to worry about managing large transfers yourself.

How much can I save by refinancing my car loan?

The amount you can save will depend on a range of factors, including the interest and fees, loan term, loan amount and balloon (if applicable). The following table shows how refinancing your loan to one with a lower rate can help you save:

Interest rate Repayments Balance after two years Interest after two years Refinanced rate New repayments Total interest Total saving
9.50% p.a. $631 $19,669 $4,791 9.00% p.a. $626 $7,639 $166
9.50% p.a. $631 $19,669 $4,791 8.50% p.a. $621 $7,474 $331
9.50% p.a. $631 $19,669 $4,791 7.00% p.a. $608 $6,985 $819
Calculations based on a $30,000 car loan repaid monthly over five years.

Additionally, shortening your term can have a major impact on the cost of your loan. Here’s how it works:

Loan term Balance after two years Interest after two years Refinanced term New repayments Total interest Total saving
Five years $19,326 $3,753 N/A $602 $6,069 N/A
Five years $19,326 $3,753 Four years $870 $5,299 $770
Five years $19,326 $3,753 Three years $1,677 $4,547 $1,522
Calculations based on a $30,000 car loan repaid monthly with a 7.50% p.a. interest rate.

Refinancing and break fees

However, it’s important to note that many lenders will charge break fees for ending your agreement early. This means that you could end up paying hundreds to exit your contract ahead of schedule and take up your new one.

If you’re refinancing to save money, this could reduce or eliminate the benefit of doing so. It’s important to check with your lender to see whether they charge early exit fees and how much they may cost you before you start the process.

Car loan repayment calculator

Crunch the numbers to see how much you could be paying

$500
$200,000

Your estimated repayments

$98.62

Total interest paid: Total amount to pay:
$1233.43 $5,143.99

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What to consider before you refinance your car loan

  • The costs vs the savings

    Locking in a lower rate and fees is all well and good, but it counts for nothing if your current lender slugs you with steep break fees. Run the numbers before you take the plunge.

  • Your vehicle's value

    If your car’s value is lower than your outstanding loan balance, it might not be the best time to refinance. Switching to a new loan would force you to cover the difference.

  • Your credit file

    If your credit score has improved, you may be able to reap the rewards by refinancing. However, if you’ve had issues in other areas, you may be better off riding out your current loan.

  • The time left on your loan

    If you make the switch early in the piece, you stand to gain more but could stump up more in break fees. If you leave it too late, it might not be worth the trouble.

  • Your reason for refinancing

    Think carefully about why you’re looking to refinance to determine if it’s worth your time. Is it something that offers a clear benefit or is it a result of a minor convenience?

Car loan eligibility and documentation

Eligibility

  • Age

    You must be at least 18 years of age

  • Residency

    You must be an Australian citizen or permanent resident (or, in some cases, an eligible visa holder)

  • Income

    You must be earning a stable income that is enough to comfortably support your repayments (this can start from as little as $20,000 to $26,000 per year)

  • Employment

    You must be employed and earning a consistent income from your job

  • Credit score

    You must meet your lender’s requirements related to your credit score

  • Car

    Your car must meet your lender’s requirements related to type, age and condition

Documents

  • Driver's licence

    Front and back (or another form of government-issued ID)

  • Payslips

    Your last two consecutive payslips (or your last tax return if you're self-employed)

  • Savvy forms

    Your Savvy application, consent form and credit guide (supplied by your consultant and completed online)

  • Car details

    Information about your car, such as its age, is handy to have

  • Bank statements

    90 days of bank statements may be requested, but not always

Car loan refinance FAQs

Can I refinance my car loan if I have bad credit?

You may be able to refinance a car loan with bad credit, but whether you can do so will depend on a range of variables, such as your credit score, repayment history and the lender you’re applying with. Applicants who can prove the following will fit into the “correctable credit” category, which will make approval more likely:

  • You’ve consistently made repayments on time and in full across your car loan term
  • You’ve paid down or eliminated other bad debts
  • You’ve maintained consistent recent employment and income, as well as a stable residential history
Can I trade in my current car with finance owing?

Depending on the terms of your agreement, you may be able to trade in your vehicle with finance owing on it. For instance, you may have the option to use the funds from your sale to pay off the rest of your loan.

What happens if my car has negative equity when I refinance it?

Negative equity is when your car loan’s outstanding balance exceeds the value of the car. If you refinance in this situation, you’d be forced to pay the difference out of pocket. That’s because your new lender won’t be willing to lend you more than the current value of the car.

Will I have to submit my documents again if I’m refinancing with the same lender?

Your lender may not require you to resubmit all your documents if you’re applying for a car loan refinance. For example, they’ll likely already have your photo ID on file. You may need to send through your financials again to verify that your income and employment are still sufficient to cover your new repayments.

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