Purchasing a new car is an exciting experience. After all, it is a purchase that has a long-lasting impact on your life. Whether you’re buying a new car to enhance your daily commute, provide extra space for family road trips, support your business needs, or give you the freedom to explore Australia’s stunning landscapes, choosing the right vehicle is undeniably a life-shaping decision.
Amid the excitement, it’s easy to rush ahead, and before you know it, you’re holding the keys in your hand—along with a new monthly commitment to manage. As the cost of living in Australia continues to rise, car loan repayments that initially felt manageable can start to stretch your monthly budget, especially when expenses like fuel and insurance have continued to climb. With transport costs up 10.5% in the financial year ending June 2024, many Australians have felt the pinch and are looking for ways to ease the financial pressure.
If this sounds familiar, now might be the perfect time to look into refinancing your car loan and taking the first steps towards relieving some financial pressure. Refinancing your car loan can positively impact your budget, lowering your repayments, saving you on interest, and even consolidating many debts into one easy-to-manage commitment.
It’s important to reflect on why your current loan is with a particular financier. While that bank or lender may have provided the best deal when you first applied, that doesn’t necessarily mean it remains the best option today. Financiers can consider a wide range of variables when offering customers a rate and repayment, like employment duration, time in residence, whether you are boarding, renting or have a mortgage if you have accessed finance before, your banking, and the conduct of your previous loans.
It is likely that as time has passed, some of these variables have changed from where they were when you initially applied, which means you could be eligible for an even better deal than what you have now. You may also have structured your loan to suit you when you initially applied, like with a shorter term to pay the loan off quicker. However, with the changes in the economy, what suited you then may not be in alignment with your needs now.
This is why it’s important to speak with a finance broker, like Fox Finance Group, who can review your current loan, explore available options, and tailor a loan structure that best suits your needs and lifestyle today.
Here are six key benefits of refinancing your car loan and how these can help you take control of your finances and budget!
A key advantage of refinancing your car loan is the opportunity to lock in a lower interest rate. If rates have dropped since you first took out your loan or your credit profile has improved, lenders can often provide a better deal with lower rates, less fees and more favourable terms. Over the life of the loan, this can save you a considerable amount of interest and free up cash that you can use in far more productive ways.
Refinancing your car loan can also lower your repayments, making your loan more manageable and freeing up some extra cash that can make a real difference to your household budget. Sometimes, lenders and banks only offer shorter terms, like a three-year loan term, which usually results in a higher repayment. When refinancing, lower interest rates aren’t the only way to reduce your repayments; you can also extend your loan term, which results in a noticeable reduction in your repayment amounts.
When you refinance your car loan, there are more things to consider than just who’s offering the lowest rate. This is the perfect time to look at all aspects of your finance, including its structure and terms. If you are in a position where you want to make extra payments and pay your loan out early, you can look for a lender that will offer a shorter term or have no penalty for an early payout. You can also look for options that offer a ballon, lenders with lower ongoing fees, and even options that don’t require your vehicle as security. It’s important to consider all aspects of your loan to determine what will meet your needs and requirements in the long term.
Refinancing your car loan also presents an opportunity to consolidate other current debts. By allowing your new bank or lender to pay out existing debts as part of your car loan refinance, you can combine multiple loans or credit cards into one manageable payment that simplifies your finances and potentially lowers your overall interest costs. This strategy makes it easier to keep track of your payments and can reduce the financial strain on your budget, helping you regain control of your debt situation.
Another benefit of refinancing is accessing additional funds for another purpose with your car loan refinance. If you have paid some of the balance on your loan down, you can borrow extra funds on top and, depending on the amount, keep your repayments the same or similar to your current repayments. This additional money could be used for various purposes, like funding a home renovation, taking a much-needed holiday, vehicle accessories, or any other purpose you can think of!
The car loan market is constantly evolving, and refinancing lets you take advantage of new, competitive offers. For instance, new vehicle lending in Australia reached $1.5 billion in July 2024, indicating a competitive lending and financial landscape with better interest rates, terms and deals available for those looking into financing a vehicle.
With transport costs rising, refinancing offers a simple yet effective way to lower your repayments, reduce your interest rate, and regain control of your finances. Our Lending Specialists are committed to finding the best car loan refinance options tailored to your needs. With access to over 50 lenders, we’ll do the work to help you reduce your payments, save on interest, and make sure your loan helps you achieve your financial goals. Our pre-approval process doesn’t commit you to anything, and you are in control of the entire process, so if you decide not to go ahead, there is no impact on you or your credit score.
Don’t keep paying more than necessary or putting up with a loan that doesn’t meet your needs—contact us today or apply now to start your journey towards freedom from financial stress and a loan tailored to you.
 Rowdie Lang |
Rowdie has been a part of our Team since 2020. He has witnessed firsthand the ongoing evolution of the finance industry as technology continues to change the way customers' access financial services. He has a passion for helping people and relishes the opportunity to work alongside our teams every day as they help our customers financial dreams come true. |
