Guide to Refinancing Your Car Loan
Want a better deal on your existing car loan but don’t know what to do? Consider refinancing. In this guide, we’ll tell you how to refinance a car loan and other important things you need to know.
What is a car loan refinance?
Refinancing a car loan involves taking out a new car loan to replace your current one. Borrowers refinance their car loans to get lower interest rates or take advantage of better loan features unavailable in their current loans.
How does car loan refinancing work?
Basically, you’re switching lenders. Once your new lender approves your refinance application, they pay off the remaining balance on your original loan. After that, you’ll make repayments to your new lender based on the terms and conditions of your car loan refinance.
How do you refinance a car loan?
The car loan refinance process is fairly simple. Here’s a quick overview of what you need to do to get a car loan refinance:
- Step 1: Review your current car loan. Look at your current loan to see if a car loan refinance is the best course of action. Make sure refinance is right for you by checking your loan balance, credit score, and finances.
- Step 2: Find a car loan refinance. Shop around for the best deal. Compare the interest rates and see what features other lenders have to offer.
- Step 3: Apply for a car loan refinance. Once you’ve found the ideal car loan refinance, complete your loan application and submit the required documents. At loans.com.au, our friendly lending specialists can assist you through the application process. You can also apply online!
- Step 4: Wait for car loan refinance approval. Sit tight as the lender reviews your application and checks if you qualify for a car loan refinance.
- Step 5: Get approved and start paying your new car loan. Once you receive approval from your new lender, contact your current lender to request a payout figure and advise them of your intent to discharge. You may have to pay a break fee with your old lender depending on your original car loan contract. Once your old car loan is paid out by your new lender, your refinance will be complete, and you’ll start your repayments on your new car loan.
The car loan refinance process can take a few days to weeks depending on the lender. Usually, the sooner you apply and submit the needed documents, the quicker you’ll get your car loan refinance.
What are the benefits of refinancing a car loan?
One of the main reasons borrowers want to refinance their car loan is to save money. With a car loan refinance, you can get out of a high-interest loan and save thousands on future repayments.
Here are more perks of refinancing a car loan:
- Get lower interest rates – Interest rates often fluctuate. If you see decreasing interest rates, it may be worth it to switch from your current loan to a new one with lower rates. Or if your credit has recently improved, you could qualify for lower rates from another lender.
- Get a new lender – If you’re not happy with your current lender, refinancing your car loan means you can find a new one that better fits your needs.
- Change your repayment frequency – You can pay off your loan sooner by making more frequent repayments from monthly to weekly or fortnightly. This also saves you a lot of interest.
- Decrease repayment amount – Car loan refinance allows you to lower your ongoing repayments. This could be by finding a loan with lower interest rates or adjusting the loan term.
- Better loan features – Your current loan may not offer redraw facilities, extra repayments, balloon payments, and the like which could help pay off your debt sooner and save on interest.
- Change your co-singer – Add or remove a co-signer when you refinance your car loan. Depending on your credit score, you could get better rates with a co-signer on your car loan.
Car loan refinancing may involve a lot of paperwork and a few upfront fees, but it often gives borrowers access to better loan features and pay less over the life of the loan.
Ready to get a car loan refinance?
If you’re looking for low-rate car loan refinance, loans.com.au offers a range of refinance options with competitive rates and incredible features. Talk to our friendly lending specialists by calling 13 10 90 to learn more. Or apply online today!
Find out in under 2 minutes if you qualify for one of our low rate car loans.
About the article
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.
