Want to get a better deal on your car loan? Consider refinancing.
Car loan refinancing can help save you money by giving you a lower rate, fewer fees and more flexibility.
Find out if refinancing is right for you and compare your options now.
- Competitive low rate
- Up to 7 years to repay
- New or used vehicles accepted
100% confidential application
Latitude New and Used Car Loan
A competitive fixed rate loan available for new and used vehicles.
- Interest rate from: 6.99% p.a.
- Comparison rate: 8.10% p.a.
- Interest rate type: Fixed
- Application fee: $295
- Minimum loan amount: $5,000
Car loans you can use to refinance
How does car loan refinancing work?
Car loan refinancing is simply switching from your current loan to another loan. You should change to a loan that gives you lower rates, fewer fees or easier repayment options to help you pay off your loan sooner or at a smaller cost.
You use your new loan to pay off the existing loan and you then continue to make repayments on the new loan. If done correctly, refinancing your car loan can potentially save you hundreds, if not thousands, of dollars.
You can either look for refinancing yourself or enlist the services of a finance broker, who will work on your behalf to get the best refinancing option.
Why should I refinance?
If you're still on the fence about refinancing your car loan, here are a few benefits to consider:
- Reduce your repayments. Your new loan may offer lower rates and fees, meaning your repayments will be smaller.
- Get a different loan term. You can choose to refinance using a new loan term and give yourself longer to pay off the loan amount.
- Make your balloon payment more manageable. If you are currently paying off dealer finance, it's likely you'll have a balloon payment to cover when your loan ends. Refinancing can allow you to pay off your balloon payment over an extended period if you aren't able to cover the final lump sum.
- Change lenders. If you're unhappy with your current lender or would prefer a different one, refinancing allows you to choose a new lender.
Steps to refinance your car loan
- Check whether you will be charged a fee for closing your loan before the end of the term. If you will be, factor that in when working out if you'll save money by refinancing.
- If you want to go ahead and refinance, you then need to compare your options. Make sure you meet the eligibility criteria and are aware of all fees and charges. Once you've found the right loan for you, click "Go to Site" to apply.
- Select "refinancing" as the loan purpose.
- Submit the relevant documents and information. This will usually include information about the lender you're with and details about your car.
- Pay off your previous loan. Your new lender may do this for you or you may be required to organise this yourself.
- Close your previous loan. Once you have paid off the old loan, you should also ensure the loan account is closed.
Options to refinance a car loan in February 2019
- Beyond Bank Low Rate Car Loan "Special Offer": 5.97% p.a. comparison rate. A limited time offer – get a car loan with a 5.69% p.a. variable rate.
- RACQ New Car Loan: 6.72% p.a. comparison rate. A car loan suitable for new vehicle purchases with no monthly administration fees.
- imb New Car Loan: 6.24% p.a. comparison rate. A new car loan with no monthly service fees and no early repayment.
- bcu Car Loan: 6.82% p.a. comparison rate. A flexible car loan with redraw facility and fee-free early payout.
Main points to consider when refinancing
- Your repayments will be less. This is very important to check. Less interest does not always mean lower repayments, so remember to take into account upfront and ongoing fees as well as the loan term you're asking for and use a comparison rate calculator to determine the cheaper option.
- You won't pay more interest over the loan term. If you extend your loan term, you may end up paying more in interest over the course of the loan, despite lower repayment amounts.
- The loan has the features that you want. If you want to be able to make extra repayments, repay the loan early, use a redraw facility or an insurance product bundle, make sure the new lender offers this.
- The lender is legitimate. A number of lenders operate in the car finance space and it is your responsibility to choose one that is reputable. See how transparent the lender is with rates and fees and how easy they are to contact before deciding on a new loan.
How to compare car loans when you want to refinance
If you've decided to refinance, keep the following in mind when comparing loans:
- Interest rate. Ensure you compare the interest rate across all the car loans available to you. The lower the interest rate the better, so try and find a loan that gives you a low interest rate to assist you in saving money.
- Flexibility in repayments. Flexibility in repayments is a huge comparison point. Can you make weekly, fortnightly or monthly repayments? It’s also important to compare if the car loan allows you to make additional repayments so you can pay off your car loan quicker. If repayment flexibility is important to you, ensure the lender offers the options you need.
- Additional fees. Most refinancing loans will have fees you may be liable to pay. Understand all the fees you may have to pay both upfront and over time and look for a refinancing option with the lowest fees to help you save money over the duration of the loan term.
- Maximum loan amount. Each refinancing option will also have different maximum loan amounts that you can borrow. If you have a certain figure in mind that you need to borrow, look for a loan that will allow you to borrow this amount.
Benefits and drawbacks of refinancing
- Lower interest rate. One of the key advantages of refinancing is securing a lower interest rate. As with any loan, interest is usually what accounts for the highest costs. Keep an eye out for a car loan with a lower interest rate than what you are currently paying. Interest rates tend to fluctuate, so it’s all about selecting the right time to refinance to get the lowest interest rate.
- Lower repayments. You can lower your repayments by extending your loan term when you refinance. This is good for those who are struggling to make their regular repayments every month due to their financial situation. Adding additional years onto your car loan will lower your repayments and free up some much-needed cash.
- Get more features from your car loan. Refinancing your car loan may also mean you can benefit from additional features on your car loan that you don’t currently have. This can include the ability to make extra repayments or a redraw facility where you can redraw repayments when you need your funds the most.
- May end up paying more interest over the term of the loan. Even if you refinance with a lower interest rate, you may end up paying more in interest if you extend the loan term. You should calculate how much you will need to pay over a longer term before deciding if it's right for you.
- Exit costs and set-up costs. Switching from your current car loan may mean incurring exit costs that you must pay. You may also be liable for set-up costs with your new car loan. These are both additional costs and cons that you need to consider.