Consider a different route to repaying your debt, by refinancing your motor vehicle loan.

Learn about refinancing motor vehicle loans, before u loan.

Refinancing your motor vehicle loan can provide various benefits, such as a simpler way of repaying your loan/s, reducing costs and improving loan terms. It’s important to determine whether refinancing is the right option for you first.

What is refinancing?

Refinancing is the process of replacing your existing motor vehicle loan with a new loan, often from a different lender.

Refinancing your motor vehicle loan can provide several benefits:

  1. Lower interest rates – Securing a new loan with a lower interest rate can save you money over the life of the loan.
  2. Reduced monthly payments – If your financial situation has improved since you took out your original loan, refinancing can result in more manageable monthly payments.
  3. Improved loan terms – Refinancing can allow you to adjust your loan terms, such as extending the loan duration for lower monthly payments or shortening it to pay off the loan faster.
  4. Consolidating debt – If you have other outstanding debts, you can use a refinance to consolidate them into a single loan, making your financial life more streamlined.
Pros
  • Potential savings – You may secure a loan with better terms, reducing your overall repayment amount.
  • Improved cash flow – Lower monthly payments can free up cash for other expenses or savings.
  • Customisation – Refinancing allows you to tailor the loan to your current financial needs.
Cons
  • Fees and costs – Refinancing can come with fees and costs, so it's crucial to weigh them against potential savings.
  • Extended loan term – Extending the loan term to lower payments may result in paying more interest over time.
  • Credit requirements – Lenders may have credit requirements for refinancing, which could be a hurdle if your credit has worsened.

Steps to refinancing a motor vehicle loan in Australia

Ready to take the wheel on refinancing your motor vehicle loan? Here's a roadmap to guide you:

  1. Assess your current loan – Review your current loan to understand its terms, interest rate, and monthly payments.
  2. Check your credit – Obtain a copy of your credit report to ensure your credit is in good shape for refinancing.
  3. Compare loan offers – Shop around and compare loan offers from various lenders to find the best terms and interest rates. A finance broker can simplify this process, doing the legwork for you.
  4. Calculate potential savings – Use an online calculator to estimate your potential savings with a new loan.
  5. Apply for refinancing – Once you've chosen a lender, complete the application process and provide all necessary documentation.
  6. Review and accept the offer – Carefully read the terms and conditions of the new loan, and if it meets your goals, accept the offer.
  7. Set up the new loan – Your lender will handle the repayment and disbursement process, closing out your old loan and initiating the new one.

Who can help me refinance my loan?

When refinancing, you have options for assistance:

  • Self-service – You can handle the process yourself, from researching loan options to applying and setting up the new loan.
  • Finance broker – A finance broker can be your expert guide through the refinancing journey. They'll compare loans from various lenders, making sure you secure the best deal.
  • Lender assistance – Some lenders offer assistance to existing customers looking to refinance, but keep in mind lenders will only offer you their own loans even if there are better options out there for you.

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