Refinancing Your Car Loan in Australia – When It Makes Sense and How to Do It
By eCarz | 18th October 2026
Quick answer: Refinancing replaces your existing car loan with a new one
Usually at a lower rate, with different terms, or both. It makes financial sense when the rate saving exceeds the total exit, establishment, and pay-out costs of switching. Compare your current total remaining repayments against the total cost of the new loan after all fees.
Car loan rates have moved materially over the past two years. Many borrowers who arranged dealer finance are paying rates above what may now be available elsewhere. Car Refinancing is one of the most financially overlooked opportunities for existing car loan holders.
When Refinancing May Make Sense
Your current rate is significantly above current market rates for your profile. Even a modest rate reduction on a meaningful remaining balance can generate worthwhile savings – calculate the total cost of staying versus switching before deciding.
Your financial position has improved. If your credit profile has improved since the original loan, you may now qualify for better terms.
You took dealer finance without comparing alternatives. Dealer finance is not always the most competitive option – it is worth comparing. Refinancing within the first 12–18 months may be worthwhile if the payout fee is low.
When Refinancing Does Not Make Sense
You are near the end of your loan. With 12–18 months remaining, the interest saving is likely small and the exit and establishment fees may outweigh it.
Your loan has significant early payout penalties. Get the full payout figure and read the exit terms before proceeding.
The vehicle’s market value is less than the remaining loan balance. Negative equity complicates refinancing – the new lender is lending against an asset that does not fully cover the debt.
How to Calculate Whether Refinancing Saves You Money
Step 1: Get your current loan’s remaining balance and exact payout figure.
Step 2: Calculate total remaining cost if you stay: monthly repayment times months remaining.
Step 3: Calculate total refinance cost: new total repayments + establishment fee on the new loan + payout fee on the old loan.
Step 4: Subtract Step 3 from Step 2. A positive result means refinancing saves you money.
Illustrative example only – not a rate quote (contact us for a quote including the comparison rate): If your current repayment is $980/month with 36 months remaining = $35,280 total. If the refinanced loan results in repayments of $871/month x 36 = $31,356, plus $400 establishment fee and $250 payout fee on the old loan = $32,006 total. Illustrative saving: approximately $3,274. Your actual saving will depend on your specific rates, fees, and loan terms.
Want to see if refinancing could work for you?
Tell us about your current car loan and we’ll compare options from our lender panel. Our brokers will check the rate, fees and total cost against what you’re paying now, so you can see whether switching actually saves you money.
Check Your Refinance Options Call eCarz or submit a form!
Frequently Asked Questions About Refinancing Your Car Loan in Australia
Yes, subject to your existing loan’s terms and any payout fees. The practical question is whether the financial benefit outweighs the total cost of switching.
A new credit application creates one hard enquiry – a minor, temporary effect on an otherwise clean file. Using a broker to identify the right lender before applying minimises the number of enquiries.
Yes – through specialist lenders who consider near-prime applications. If your financial position has genuinely improved since the original loan, you may access better terms.
Conditional approval can come back same day for straightforward applications. Full settlement typically takes 3–5 business days.
Think you may be paying more than you need to? Contact eCarz on 1300 378 387 or visit ecarz.com.au for a quote including the comparison rate.