Can I refinance a car loan with bad credit?

You can refinance a car loan with a below average credit score but you won't get a competitive interest rate. If your credit score has gotten worse since you took out your original car loan then refinancing means you might end up with a higher rate. There are also car loans specifically for bad credit borrowers . These loans have higher interest rates.

Can I pay off my car loan early?

Some lenders charge exit fees for ending a loan early. Fixed rate loans have the most expensive fees for breaking the loan and ending it early. Before refinancing, check the costs of discharging your old loan by contacting your lender. For the new loan, check that it allows you to make extra payments.

Does refinancing hurt your credit score?

Not necessarily. Applying for any loan causes a small dip in your credit score. But your score will bounce back in a couple of months as you repay the loan.

Does my choice of lender matter when refinancing a car loan?

The main focus for any borrower should be the loan itself. Is the rate lower? Are there fewer fees? Are you eligible? But there are some real differences between lenders. Online lenders often have competitive rates and fast approvals. But if you're already banking with a big bank it may already have all the details it needs from you, plus a handy app to manage all your finances.

Refinance Car Loan for Lower Payments December 2025

Want to refinance your car loan to the lowest rate?

Right now on Finder, the cheapest new car loan rate is 5.79% p.a. offered by South West Slopes.
Right now on Finder, the cheapest used car loan rate is 5.67% p.a. offered by MoneyPlace.

9 of 108 results

Finder Score	Interest Rate (p.a.)	Comp. Rate (p.a.)	Application Fee	Monthly Fee	Rewards	Monthly Repayment
Finder Score 9.5 Excellent IMB New Car Loan Fixed1 - 7 Years $2,000 - $125,000	Finder Score 9.5 Excellent	Interest Rate (p.a.) 5.99%	Comp. Rate (p.a.) 6.34%	Application Fee $274.78	Monthly Fee $0	Monthly Repayment $616.71	Borrow up to $125,000, pay no account-keeping fees and repay with fixed repayments while having the ability to repay early.	Go to site More info Compare product selectionCompare	loading
Finder Score 9.1 Excellent Stratton Finance New Car Loan Fixed1 - 7 Years $10,000 - $300,000	Finder Score 9.1 Excellent	Interest Rate (p.a.) 5.67% to 18%	Comp. Rate (p.a.) 6.1% to 23%	Application Fee $395	Monthly Fee $0	Monthly Repayment $617.41	Your own personal car loan broker can help you borrow up to $300,000 for your new car by choosing from a range of finance options.	Go to site More info Compare product selectionCompare	loading
Finder Score 9.3 Excellent OurMoneyMarket New Car Loan ($5,000-$100,000) Fixed1 - 7 Years $5,000 - $100,000	Finder Score 9.3 Excellent	Interest Rate (p.a.) 5.95% to 18.99%	Comp. Rate (p.a.) 5.95% to 21.78%	Application Fee $0 min.	Monthly Fee $0	Monthly Repayment $607.99	No monthly or early exit fees. Loan amounts range from $5,000 to $100,000. Eligibility: Applicants with an Equifax credit score of 500 or above and an annual income of more than $25k are eligible.	Go to site More info Compare product selectionCompare	loading
Finder Score 8.5 Great RACV New Car Loans Fixed1 - 7 Years $5,000 - $100,000	Finder Score 8.5 Great	Interest Rate (p.a.) 6.59% to 17.69%	Comp. Rate (p.a.) 7.29% to 18.47%	Application Fee $499	Monthly Fee $0	Monthly Repayment $629.11	Go to site More info Compare product selectionCompare	loading
Finder Score 9.3 Excellent OurMoneyMarket Used Car Loan ($5,000-$100,000) Fixed1 - 7 Years $5,000 - $100,000	Finder Score 9.3 Excellent	Interest Rate (p.a.) 5.95% to 18.99%	Comp. Rate (p.a.) 5.95% to 21.78%	Application Fee $0 min.	Monthly Fee $0	Monthly Repayment $607.99	No monthly or early exit fees. Loan amounts range from $5,000 to $100,000. No vehicle age limit. Eligibility: Applicants with an Equifax credit score of 500 or above and an annual income of more than $25k are eligible.	Go to site More info Compare product selectionCompare	loading
Finder Score 8.9 Great Stratton Finance Used Car Loan Fixed1 - 7 Years $10,000 - $300,000	Finder Score 8.9 Great	Interest Rate (p.a.) 6.59% to 18%	Comp. Rate (p.a.) 7.91% to 23%	Application Fee $395	Monthly Fee $0	Monthly Repayment $625.92	Your own personal car loan broker can help you borrow up to $300,000 for your new car by choosing from a range of finance options.	Go to site More info Compare product selectionCompare	loading
Finder Score 8.1 Great loans.com.au - New/Demo - Variable Rate Variable3 - 7 Years $5,000 - $150,000	Finder Score 8.1 Great	Interest Rate (p.a.) 5.99% to 15.89%	Comp. Rate (p.a.) 7.12% to 17.01%	Application Fee $400	Monthly Fee $8	Monthly Repayment $628.52	Go to site More info Compare product selectionCompare	loading
Finder Score 8.2 Great RACV Used Car Loans Fixed1 - 7 Years $5,000 - $100,000	Finder Score 8.2 Great	Interest Rate (p.a.) 7.89% to 17.69%	Comp. Rate (p.a.) 8.6% to 18.47%	Application Fee $499	Monthly Fee $0	Monthly Repayment $641.32	Benefit from no ongoing fees, 5-hour approval and a 21-day satisfaction guarantee. Interest rate discounts for members.	Go to site More info Compare product selectionCompare	loading
Finder Score 9.3 Excellent OurMoneyMarket Secured Personal Loan ($5,000-$100,000) Fixed1 - 7 Years $5,000 - $100,000	Finder Score 9.3 Excellent	Interest Rate (p.a.) 5.95% to 18.99%	Comp. Rate (p.a.) 5.95% to 21.78%	Application Fee $0 min.	Monthly Fee $0	Monthly Repayment $607.99	Go to site More info Compare product selectionCompare	loading

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Showing 9 of 9 results

Finder Score for car loans

To make comparing car loans even easier we came up with the Finder Score. Interest rates, fees and features across 200+ car loan products and 100+ lenders are all weighted and scaled to produce a score out of 10. The higher the score, the more competitive the product.

Read the full methodology

What you need to know about refinancing a car loan

You can refinance your car loan to unlock a lower rate, saving you money.
To switch, start by comparing loans and make sure your new car loan works out to be cheaper.
Pay attention to the loan term and fees before refinancing. And check your credit score.

How to refinance a car loan in 5 steps

Compare car loans. Compare car loans from multiple lenders and find a loan with a lower rate that suits your needs.
Do the maths. Use a calculator and work out the cost of the new loan, including fees and how the loan length and interest rate affect your repayments. Don't forget about any exit fees from the old loan.
Apply for the new loan. Complete the lender's application process and make sure you have all the paperwork and identification documents you need.
Discharge the old car loan. You will need to pay off and discharge the old loan. Your new lender should help you with this process.
Start repaying your new car loan. Once the new loan is approved you can concentrate on paying it off.

How car loan refinancing can save you money

Refinancing a car loan means applying for a new loan and paying off the old one. You can refinance a car loan to get a better deal with a new lender and to get out of debt faster.

You should aim to refinance to a new car loan with fewer fees and a lower interest rate than your old one. This saves you money.

Example: refinancing a car loan to lower your repayments

You have a $20,000 car loan with a 12% interest rate. It's a 4-year loan and after 1 year you've paid off $5,000. This leaves you with an outstanding debt of $15,000 over 3 years.

Since getting the loan your credit score has improved significantly. You are confident you can now get a much lower interest rate.

You find a new loan with a rate of 7%. After comparing the loan fees and repayments, you apply for a new 3-year loan and borrow $15,000.

At 12% over 4 years, your old car loan repayments were $527 a month. With your new, lower-rate loan the repayments are just $464 a month over 3 years.

Car loan refinance calculations

Here are 3 similar car loans with different interest rates. You can see how the lower interest rate saves you money over time.

	Loan 1	Loan 2	Loan 3
Loan amount	$30,000	$30,000	$30,000
Interest rate	15%	10%	7%
Loan term	4 years	4 years	4 years
Monthly repayment	$835	$761	$719
Total loan cost	$40,077	$36,523	$34,483

Looking at these examples, loan 3 works out to be $2,040 cheaper than loan 2 and $5,594 cheaper than loan 1.

These are just simple examples and don't include loan fees.

6 car loan refinancing traps and mistakes to watch out for

Make sure you refinance to a new loan that's both cheaper than the old one and suitable for you.

Factor in all the costs of both loans
Look at the new car loan's application and monthly fees, and any discharge or exit fees that come with your old one.
Pay attention to the loan term
Let's say you have a 5-year loan term. After 2 years you decide to refinance to a new 5-year loan. This means you're actually extending your 5-year debt into a 7-year debt (2 years of the original loan plus 5 for the new one). This means you'll pay more interest over the longer term.
Choosing the right loan term is about finding a balance between manageable monthly repayments and the overall interest you pay.
If the loan term is too long you'll have small monthly repayments but your lender will get a lot more interest from you. A shorter term means higher monthly costs but you'll get out of debt faster.
Make sure the new loan is the right type of loan for you
There are some differences between car loans. Some have fixed or variable interest rates, and some allow you to make extra repayments.
Make sure your car is eligible for the new loan before you refinance. If your car is too old or the wrong model, you might not qualify for a particular loan.
Check your credit score before refinancing
Before refinancing, check your credit score. Many lenders determine your car loan's interest rate based partly on your credit score. If your score is good or excellent you have a strong chance of getting a good deal.
If your score has fallen since you took out the original car loan you'll probably need to improve your score before refinancing.
Don't forget about depreciation
Cars lose value quickly, especially new ones. This can be a problem when refinancing if your car is used to secure the loan.
If you bought a brand new car worth $32,000 and it loses 10% of its value as soon as it's sold and a further 10% a year, after just 2 years the car would be worth $23,328.
If your car's depreciation outpaces the outstanding loan amount you might have a harder time refinancing. This is less of a problem if you've paid off a good chunk of the loan or if you paid some of the car's total cost upfront.
Avoid over-applying for loans
Every loan application impacts your credit score. Avoid applying for multiple car loans at once. You can only refinance to one loan, so find the best one for you, make sure you're eligible and then apply.
If your credit report has multiple loan enquiries then a lender will consider you a higher-risk borrower. You may end up on a higher rate or have your application rejected.

Frequently asked questions

You can refinance a car loan with a below average credit score but you won't get a competitive interest rate. If your credit score has gotten worse since you took out your original car loan then refinancing means you might end up with a higher rate.
There are also car loans specifically for bad credit borrowers. These loans have higher interest rates.
The main focus for any borrower should be the loan itself. Is the rate lower? Are there fewer fees? Are you eligible?
But there are some real differences between lenders. Online lenders often have competitive rates and fast approvals. But if you're already banking with a big bank it may already have all the details it needs from you, plus a handy app to manage all your finances.

Sources

Thank you for your feedback!

Written by

Elizabeth Barry

Journalist

Elizabeth Barry is an experienced journalist with over 10 years of expertise in personal finance, contributing to outlets like the ABC, Sydney Morning Herald, and 7News. She holds a Master of Arts in Creative Writing and a Bachelor of Arts in Communication from the University of Technology Sydney, and has earned multiple award nominations, including a Highly Commended recognition at the 2017 Lizzies. Elizabeth began her career at Finder in 2013, progressing through roles to become Lead Editor, where she oversaw a wide range of personal finance coverage until 2024. See full bio

Elizabeth's expertise

Elizabeth has written 202 Finder guides across topics including:

Banking
Personal finance
Investing

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32 Responses

ColleenFebruary 5, 2015

I am wanting to refinance my car loan, The payout figure is $14,000 and the interest is currently 23.99%. I am ex bankrupt but have been discharged and the &yrs were up oct 3rd 2015.
Can you help me with this. the car will be a secured loan.

Colleen

Finder

ShirleyFebruary 5, 2015Finder

Hi Colleen,

Thanks for your question.

Please note that finder.com.au is an online comparison service and is not a product issuer. If you would like to discuss your eligibility or options, please get in touch with a lender featured on this page.

As an ex-bankrupt, your name will still appear on the National Personal Insolvency Index (NPII) which is accessible by lenders should they run a credit check. You may want to approach a smaller or second tier lender instead.

Cheers,
Shirley

JinFebruary 1, 2015

Good afternoon, Shirley.

I am thinking to refinance my car but I don’t know where to start.
My current car ‘s loan is 5 years left out of 7 years.The interest rate about 14.5%. I think, I still have a total to pay about $40,000. Anyway that I make somewhere else lower interest rate in 4 or 5 years?
thank you very much.

Jin

Finder

ShirleyFebruary 2, 2015Finder

Hi Jin,

Thanks for your question.

The process usually involves taking out a new car loan to pay out your existing one. Be mindful that there are switching fees and early loan repayment fees from your old loan, and application fees for your new loan.

You can compare a range of car loans above, but it would be best to speak to the lender first about your intention of refinancing and they can advise on the right processes.

Cheers,
Shirley

JinFebruary 2, 2015

Hey, Shirley
Thank you so much.

Finder

ShirleyFebruary 3, 2015Finder

You’re welcome!

JinFebruary 7, 2015

Hi, Shirley

What if, I would like to change to a new car and use my current loan. Is it worth to do or better to sell it and buy a new one?

Thank you

Finder

ShirleyFebruary 9, 2015Finder

Hi Jin,

Thanks for your question.

Please note that finder.com.au is an online comparison service and is not in a position to recommend personalised advice.

There are a lot of factors to consider, such as your personal situation, ongoing costs, the residual value of the vehicle and the value of the vehicle you intend to purchase. It’s probably best to speak to your lender regarding this as they’re in a much better position to answer this.

Cheers,
Shirley

PhilJanuary 26, 2015

I was a bankrupt until about 2 years ago and payed off a secured loan through this time.
Then about 18 months ago I arranged a $22,000 loan at about 30 percent ( $184.00 per week for 5 years) and have paid this faithfully, I also have been employed for 13 years at the same company.
My question is would it be better to try and refinance, or simply keep paying off the present loan.

Finder

ShirleyJanuary 27, 2015Finder

Hi Phil,

Thanks for your question.

As a discharged bankrupt, your name will appear on the National Personal Insolvency Index (NPII), a register that is accessible by lenders should they choose to, after you have given permission during your application process.

Ultimately the decision is up to you whether it would be better to try and refinance or keep paying off the present loan. It’s advisable for you to speak to a financial advisor regarding the risks of both methods.

Cheers,
Shirley

TomJanuary 23, 2015

Best way to start the process of refinancing my car.
Who to speak to.
I have a good credit rating, yet I need to lower my repayments.

Finder

ShirleyJanuary 23, 2015Finder

Hi Tom,

Thanks for your question.

Please note that we don’t recommend specific products, services or providers.

If you’re looking to lower your repayments, you may want to consider a lower interest rate compared to your existing loan.

You can compare a range of personal loans above this page to see if you’re interested in any of the loans.

Cheers,
Shirley

ParisJanuary 20, 2015

I have a car loan with ge I want to up grade my car n loans.com how do i do that

Finder

ShirleyJanuary 21, 2015Finder

Hi Paris,

Thanks for your question.

The process involves you taking out a new loan with loans.com.au for your car to pay out your existing loan with GE Money.

To find out more information or to apply for the loans.com.au car loan, please click on ‘go to site’ to be taken to their website to make an enquiry. Also, the team there will be advise on the refinancing process.

Cheers,
Shirley

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