How to refinance a car loan in Australia

Published 30 July 2026. General information only, not personal advice.

What refinancing a car loan means

When you refinance, a new lender pays out your existing loan in full and you start repaying the new lender instead, on new terms. The car stays yours throughout. Done well, you end up paying less overall, or with repayments that fit your budget better. Done carelessly, you can end up paying more for longer, which is why the comparison step matters more than the switch itself.

When refinancing is worth a look

• Your credit has improved since you took the loan. If you borrowed when your file had problems and you've since built a clean track record, you may now qualify with lenders who wouldn't touch the original application. This is one of the most common and most worthwhile reasons to refinance. Our guide on credit scores and car loans explains why recent conduct counts so heavily.
• You took dealer finance under time pressure. Plenty of people sign the loan that was in front of them on the day. Comparing it against the wider market afterwards costs nothing and sometimes reveals real savings.
• The market or your lender has moved. If similar borrowers are getting better deals than yours, it's worth testing.
• Your budget has changed. Refinancing can restructure repayments, shorten the term to pay the car off faster, or lengthen it to reduce the monthly figure. Note that a longer term usually means more interest overall, even when each repayment is smaller.
• A balloon payment is looming. If your loan has a balloon or residual due at the end and you don't want to pay it as a lump sum, refinancing the balloon into a new loan is a common way to handle it. Plan this early, not the month it's due.

When it's probably not worth it

• The loan is nearly paid off. Most interest is paid early in a loan's life. With only a year or so left, the saving from switching often won't cover the costs of switching.
• Exit and setup costs eat the benefit. Your current lender may charge an early payout or break fee, and the new loan may have establishment fees. Always compare the total cost of staying against the total cost of switching.
• You owe more than the car is worth. Lenders are cautious when the loan balance sits well above the car's value. It's not always a dealbreaker, but it narrows the options.
• Your credit has recently gone backwards. Refinancing works when your position is the same or better than when you first borrowed.

The refinance process, step by step

1. Get your payout figure

Ask your current lender for a payout letter. This states exactly what it costs to close the loan today, including any early exit fees. You can't compare anything meaningfully without it.

2. Check where you stand

Pull together the same basics as any loan application: ID, payslips or business financials, your expenses, plus the car's details and your current loan statement.

3. Compare properly, not just on rate

Line up your current loan against each alternative on total remaining cost: every repayment left plus fees on the existing loan, versus every repayment plus establishment and other fees on the new one. Our repayment calculator helps you sense check the numbers. A shiny rate with a stretched term can cost more than the loan you already have.

4. Apply once, in the right place

Formal applications involve a credit enquiry, so avoid applying lender by lender to compare. We check your situation across our panel first with no credit enquiry, then lodge one application with the lender you choose. The detail of what we compare is on our refinance page.

5. Settle and switch

Once approved, the new lender pays out the old loan directly and registers its interest over the car. Confirm the old loan shows as closed, update any direct debits, and keep the payout confirmation for your records.

Questions to ask before you sign a refinance

• What is my payout figure, and does it include early exit fees?
• What will I repay in total on the new loan, fees included, versus finishing my current one?
• Is the new term longer than what's left on my current loan?
• Is there a balloon on the new loan? Was there one on the old loan?
• What are the new loan's fees for early payout, in case I want to finish it ahead of schedule?

The bottom line

Refinancing isn't automatically a win, it's a comparison. Get your payout figure, compare total cost against total cost, and only switch when the numbers genuinely favour it. If your credit has improved or you signed under pressure at a dealership, there's a fair chance they will. And if the numbers say stay put, that's a good outcome too, now you know your loan holds up.