The benefits of refinancing your car loan
Refinancing comes with great benefits, including:
Lower interest rate
Securing a better interest rate on your car loan is one of the main reasons people tend to refinance. Getting a lower rate on your new loan means your monthly repayments can be a lot less than they were with your previous lender.
Shorter loan term
When you refinance your car loan, you can usually change to a shorter loan term. This can help you pay it off sooner, so you can improve your credit score and clear some debt. Another option is to extend the loan term to stretch things out and take your time in paying it off.
New features on your loan
Switching to a new loan can give you access to a range of different features. When you refinance your car loan with us, you’ll get no monthly fees, unlimited extra repayments, free redraw, and a personalised rate based on your credit history.
What to consider when refinancing a car loan
There are some one-off costs you’ll need to consider when refinancing your car loan. While these fees can put some car owners off from switching loans, the long-term benefit of having a lower rate is often worth it.
Knowing what these fees are before deciding to refinance can help you be prepared for when they come up during the process. Some of these costs include:
- Early termination fee – this cost covers the loss that the original lender might have if you end your car loan earlier than the agreed term. For example, if you refinance in the second year of a five-year loan term, you might have to pay this fee.
- Transaction fee – this type of fee comes from the new lender for processing and completing the refinancing process, which includes paperwork and verification.
- Registration fee – this covers the cost of registering your new loan with the new lender.
What type of car loans can you refinance?
You can refinance any type of car loan, including secured, unsecured or green car loans. And you may also apply for one of a new type of car loan if it works in your favour.
For example, if you bought a hybrid or electric car before you learnt about green car loans, then you might be able to switch loans – unless your hybrid or electric car is over seven years old.
Car refinancing checklist
The key to a successful refinancing application is being prepared. That’s why we’ve shared a simple checklist below that you can use to be refinance ready.
Eligibility Checklist
You must:
- Be at least 18 years old.
- Be an Australian citizen or permanent resident.
- Earn a regular income.
- Have not been bankrupt or insolvent in the last five years.
Documents to prepare for car refinancing
You need to have:
- Proof of identification, like your driver’s license.
- Proof of income and expenses, like a pay slip and list of expenses.
- Vehicle information, like the car model and year.