Car Loan Refinancing
Stuck in a high-rate car loan? Refinance with Kreddi and save thousands. Compare 60+ lenders for better rates and flexible terms.
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What is Car Loan Refinancing?
Car loan refinancing means replacing your existing car loan with a new loan from a different lender (or the same lender) at better terms. The new lender pays out your old loan in full, and you start making repayments on the new loan. Australians refinance car loans to achieve three main goals: lower interest rates, reduce monthly repayments, or access equity in their vehicle.
Why refinance? Many Australians take their first car loan through a dealership or their bank without shopping around. Dealer finance often carries rates of 10-15% p.a., while bank loans for customers with average credit score around 8-12% p.a. After 12-18 months of consistent repayments, your credit score improves, market rates drop, or you simply realize you're paying too much. Refinancing lets you "reset" with a better deal.
Real example: Sarah bought a $35,000 used Toyota RAV4 in 2023 through dealer finance at 13.9% p.a. over 5 years ($819/month). After making 18 months of on-time payments, her credit score improved from 620 to 710. In 2024, she refinanced the remaining $28,000 balance with us at 7.9% p.a. over 4 years ($677/month). She's saving $142/month or $6,816 total, minus $350 in refinancing fees. Net savings: $6,466.
Top Reasons to Refinance Your Car Loan
1. Your Credit Score Has Improved
If your credit score has increased by 50+ points since your original loan, you likely qualify for significantly better rates. Example: a credit score improvement from 600 to 680 can reduce your rate from 12% to 8% p.a., saving thousands over the loan term. Even paying off other debts (credit cards, personal loans) improves your debt-to-income ratio and strengthens your refinancing application.
2. Market Interest Rates Have Dropped
Car loan rates fluctuate with the RBA cash rate and market competition. When the RBA cuts rates or lenders compete aggressively for customers, refinancing opportunities arise. In 2023-2024, some lenders dropped rates from 9-10% to 6-7% p.a. for prime borrowers. Even if your credit hasn't changed, market conditions may now favor you. We monitor rates daily and notify customers when refinancing makes sense.
3. You're Paying Over 10% p.a. (Dealership Finance)
Dealership finance (arranged when you buy the car) typically carries rates of 10-18% p.a. because dealers mark up lender rates to earn commission. If you accepted dealer finance to "get the deal done," refinancing 6-12 months later can save you huge amounts. We regularly help customers refinance dealer loans at 14% p.a. down to 7-9% p.a., cutting their interest bill in half.
4. You Want to Reduce Monthly Repayments
Life changes — income drops, expenses increase, or you just need breathing room in your budget. Refinancing can extend your loan term (e.g., from 3 years remaining to 5 years) to lower monthly repayments. While you'll pay more interest total, the immediate cash flow relief may be necessary. Example: $700/month repayments become $520/month by extending the term, freeing up $180/month for other expenses.
5. You Want to Pay Off Your Loan Faster
Conversely, if your income has increased or you've cleared other debts, you might want to refinance to a shorter term with higher repayments to save on interest and own your car outright sooner. Example: refinancing from 4 years remaining at 9% to 2 years at 7% increases monthly repayments but saves you $3,000+ in interest and gets you debt-free 2 years earlier.
6. Access Equity for Cash Needs
If your car has appreciated in value or you've paid down significant principal, you may have usable equity. For example, you owe $15,000 but the car is worth $25,000 (equity = $10,000). You can refinance for $22,000, paying off the $15,000 loan and receiving $7,000 cash for home improvements, debt consolidation, or emergencies. This is cheaper than credit cards (18-22% p.a.) or personal loans (9-15% p.a.).
The Car Loan Refinancing Process
Refinancing with Kreddi is simple and stress-free. Here's exactly how it works:
Step 1: Apply Online (5 Minutes)
Complete our quick refinancing application. We need: your current loan details (lender name, interest rate, remaining balance, monthly payment), vehicle details (make, model, year, odometer), and your current financial situation (income, employment, expenses).
Tip: Have your latest loan statement handy — it shows your payout amount and interest rate.
Step 2: We Calculate Your Savings (1 Hour)
Our brokers compare your current loan against 60+ lenders to find better rates. We calculate: total interest savings, monthly repayment reduction, fees involved, and net benefit. If refinancing saves you at least $1,000 after fees, we recommend proceeding.
Transparency: If refinancing doesn't save you money, we'll tell you. We won't waste your time.
Step 3: Approval (1-3 Days)
We submit your application to the lender offering the best rate. Refinancing approvals are typically faster than new loans because the car is already financed and you have a proven repayment history. Conditional approval usually comes within 24-48 hours.
Step 4: Payout & Settlement (3-5 Days)
Once approved, the new lender requests a payout quote from your current lender (exact amount needed to clear the loan). The new lender pays this directly to your old lender, discharges the old PPSR registration, and registers the new loan. You don't handle any money — it's all done between lenders.
Important: Keep making payments on your old loan until you receive confirmation it's paid off. Missing payments during the switchover can harm your credit.
Step 5: Start Saving (Immediately)
Your first repayment to the new lender is typically due 30-45 days after settlement. From day one, you're paying less interest and building equity faster. You'll receive a new loan agreement, payment schedule, and access to the new lender's online portal.
Refinancing Fees: What to Expect
Refinancing isn't free, but fees are usually minor compared to savings. Here's a breakdown:
| Fee Type | Amount | Who Charges It |
|---|---|---|
| Early exit fee | $150-$400 | Current lender |
| PPSR discharge | $10-$15 | Current lender |
| Application fee | $0-$500 (often $0) | New lender |
| Establishment fee | $0-$300 | New lender |
| PPSR registration | $10-$15 | New lender |
| Total typical fees | $200-$900 | — |
Break-even calculation: If fees total $500 and you're saving $150/month, you break even after 3.3 months. Everything after that is pure savings. Our rule: only refinance if you'll save at least $1,000 net after fees.
Why Use Kreddi for Car Loan Refinancing?
Refinancing directly with your current lender or one bank is limiting. You'll only see one rate, with no comparison. At Kreddi:
- We compare 60+ lenders to find the absolute lowest rate you qualify for, not just "a better rate."
- $0 broker fees — we're paid by lenders when your loan settles, so our service is completely free to you.
- Expert negotiation — we leverage our lending relationships to negotiate rates lower than advertised retail rates.
- Fast turnaround — refinancing approvals in 24-48 hours, settlement within 5-7 days total.
- Honest advice — if refinancing won't save you money, we tell you upfront. We don't push unnecessary refinances.
- Handle all paperwork — we coordinate between your old lender and new lender so you don't chase paperwork.
Recent success: We refinanced a Perth customer's $42,000 Nissan Navara loan from 11.5% p.a. (dealer finance) to 6.9% p.a., reducing repayments from $928/month to $784/month and saving $8,640 in interest over 5 years. Total fees: $380. Net savings: $8,260. The entire process took 6 days from application to settlement.
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Car Refinancing FAQs
Savings depend on your current rate, loan balance, and the new rate you qualify for. Typically, refinancing can save you $1,000-$5,000 over the remaining loan term. For example: a $30,000 loan with 3 years remaining at 12% p.a. costs $997/month. Refinancing to 8% p.a. reduces this to $940/month, saving $2,052 total. Even a 1-2% rate reduction is worthwhile if you have a large balance or long remaining term.
Consider refinancing if: 1) Your credit score has improved since your original loan (50+ point increase can lower rates 2-4%), 2) Market rates have dropped (RBA cash rate changes affect car loan rates), 3) You're paying over 10% p.a. and have good credit now, 4) You want to reduce monthly repayments or pay off faster, 5) Your lender offers poor customer service or inflexible terms. The best time is typically 12-18 months into your loan when you've built equity but still have significant balance remaining.
Typical fees include: Early exit/discharge fee from current lender ($150-$400), PPSR discharge fee ($10-$15), new loan application fee ($0-$500, often waived), new loan establishment fee ($0-$300), new PPSR registration ($10-$15). Total fees typically range $200-$900. At Kreddi, we calculate whether savings exceed costs before recommending refinancing. Rule of thumb: if you'll save more than $1,000 over the loan term, refinancing is worthwhile despite fees.
Yes, but outcomes vary. If your credit has worsened since your original loan, you may not qualify for better rates. However, if your credit issues are old (2+ years) and you've made 12+ months of consistent payments on your current loan, lenders view this positively. Even with bad credit, refinancing can help if you're stuck in a high-rate loan (15-20% p.a.) — we may reduce this to 12-14% p.a., still saving you thousands. Specialist lenders we work with focus on recent payment behavior, not just credit scores.
The refinancing process typically takes 5-10 business days: Application (1 day), Approval (1-3 days), Payout quote from current lender (1-2 days), Settlement (2-4 days). We handle coordination between your current lender and new lender. You continue making payments to your old lender until settlement, then switch to the new lender. There's usually no gap — the new lender pays out the old loan directly, and you start fresh with new repayment terms.
Yes! If your car is worth more than you owe, you can access this equity (cash out) when refinancing. For example: you owe $20,000 but the car is worth $28,000 (equity = $8,000). You could refinance for $25,000, paying off the $20,000 loan and receiving $5,000 cash. This cash can be used for anything — home improvements, debt consolidation, emergency expenses. Note: accessing equity increases your loan balance and repayments, so only borrow what you need.
Minimally. The refinancing application creates one hard credit enquiry, which may temporarily lower your score by 5-10 points. However, paying off your old loan and opening a new one with better terms can improve your score over 6-12 months through: lower credit utilization, consistent on-time payments, and demonstrating responsible credit management. At Kreddi, we submit your application to multiple lenders using a single enquiry to minimize impact.
Yes, but it's challenging. This is called "negative equity" or being "underwater" on your loan. For example, you owe $35,000 but the car is worth $30,000. Some lenders will refinance negative equity loans if: 1) The shortfall is small (<$5,000), 2) You have good credit (650+ score), 3) You can provide additional security or guarantor, or 4) You make a cash payment to reduce the loan to the car's value. Alternatively, wait 6-12 months to pay down principal and let the car's value stabilize before refinancing.