Can you refinance a car loan?

Refinancing is simply replacing one finance contract with another. The most common form of this is using a personal debt consolidation loan to pay off other debts such as credit cards, personal loans or Buy Now Pay Later contracts. 

That said, you can also refinance an existing secured car loan contract and switch to a new one. Whether or not you can do this will usually depend on both your existing loan contract provider and your new lender. 

With car loan refinancing, you’ll want to check with your existing lender if you’ll need to pay any early repayment fees for settling your contract early. You’ll then also want to double check with your new lender if they’re happy to facilitate car loan refinancing. 

Want to know more about all things car loans? Check out our Smart Guide, The Complete Guide to Car Loans in Australia.

Yes! As we just mentioned, at Wisr we can offer to refinance your current asset finance contract. Just note that we may need a valid payout letter from your current financier. 

We offer refinancing for eligible new or used cars, caravans or medium commercial vehicles (up to 12 tonnes) over repayment terms of 3, 5 or 7 years. 

It’s also worth noting that with a secured car loan, the car financed will be used as a security for the loan. This means that if you were to stop making your loan repayments, the vehicle could be repossessed to recover the amount owed.

Switching to a new loan contract can have its perks! Here are some of the main benefits of refinancing a car loan. 

• You could switch to a contract with a better interest rate

• You may be able to extend your loan term and spread the cost out over a longer period

• You could shorten your loan term and repay what you owe quicker

• You may be able to switch to a lender with added perks, such as zero early repayment fees

• You may be able to switch to a deal that is more reflective of your car’s current value (since cars depreciate in value over time, a new repayment plan may reflect what the car’s value is now and not what it was worth when you originally bought it)

Before you refinance a car loan, there are a few things you need to think about. 

• You may be charged early repayment and exit fees by your current car loan provider, so you’ll need to factor these into any savings you might make 

• If you extend your loan term, your monthly repayments will be lower but you’ll repay more in interest overall 

• Your new lender could have less perks than your original lender

Whether or not you can use a personal debt consolidation loan to refinance a secured car loan will be down to both your new loan provider and your existing loan provider. 

Before you go ahead and apply, check your current car loan contract to see if you can settle your current loan early and if there are any fees involved. Then check with your new lender if they’re happy to lend to refinance a secured loan contract. 

Aside from that, you’ll also need to consider whether a personal loan will cover your outstanding amount and if you’ll be eligible for finance without a security. For instance at Wisr, we offer personal loans up to $62,000 and secured car loans up to $147,000.

Finally, you can get a rate estimate to check what your personalised rate would be. Interest rates are often more favourable on secured loans than personal loans, however if you’ve been consistently repaying your current car loan for a while, you may now be eligible for a better interest rate than when you first took out your finance contract.

You can refinance a car loan by following these simple steps:

1. Check your current contract: take a look at your current car loan contract to see if you’ll need to pay any early repayment fees for paying off your loan before the end of your loan term. 

2. Look for a lender that offers refinancing: when hunting for a lender to refinance your secured loan, double check if this is something they’ll facilitate before applying. At this point, it could also be a good idea to make a note of any additional perks that these lenders offer compared to your existing loan contract provider. 

3. Get a rate estimate: found a lender you like the look of? Great stuff! The next step is to get a rate estimate that won’t affect your credit score. This will give you a clear idea of exactly what you’re eligible for.

   If you’re still choosing between a few, you could play around with their car loan calculators to get a rough idea of what they offer before getting an estimate.

4. Apply for car loan refinancing: if you like what you see and you’ve weighed up all the potential costs vs benefits, you can go ahead and apply. 

   Simply fill out your chosen lender’s application form and supply them with the required documents. Then, if approved, you can use the new loan to pay off your current contract and start making repayments to your new loan provider. 

Want to see what your car loan refinancing options are with Wisr? Get a quick car loan estimate now to find out.