The ultimate guide to car loan refinancing

Think your current car loan is set in stone? Think again. Refinancing your car loan could keep you in the driver’s seat of your lending goals.

There are many reasons why you might look to refinance, and it’s all about finding what fits your specific needs and financial situation.

What is a car loan refinance?

A car loan refinance involves replacing your current loan with a new one, often at better rate or longer term. This could involve refinancing with your current lender or switching to a new lender.

Why refinance your car loan?

The main reason why you may choose to refinance an existing car loan is to reduce your repayments. By doing so, you could improve your financial flexibility and potentially put money back into your pocket.

When should you refinance?

The right time to refinance your car loan will likely depend on your reason for refinancing and your individual situation.

For example, it might not suit you if your loan term is almost up, your car's value is less than what you owe, or the fees involved outweigh the potential savings.

Here are some examples of times when you might consider refinancing:

1. Your balloon payment is coming up

If you don’t have enough cash on hand to cover the balloon payment, or you’re looking for a solution to help with cash flow, refinancing spreads that large payment over a new loan term, making it more manageable with monthly instalments.

2. Your personal circumstances have changed

Whether you have improved credit or a new career, refinancing could help you secure a more attractive rate.

3. You found a better deal

Found a loan with more favourable terms and features? Before you sign on the dotted line, check the terms and conditions of the loan and run the numbers to ensure the fees don’t outweigh the potential savings.

How do you refinance a car loan?

Whether you’re self-employed, looking for a fresh start, or want a more flexible car loan, the first step for a car loan refinance is to talk to your current lender or a lending expert.

Next, it’s time to crunch the numbers. Compare your outstanding loan balance with the cost of the new loan, including fees, interest rates, and repayment terms.

Once you’ve applied for a new loan and are approved, your current car loan will be discharged, and you can start making repayments on your new loan.

If you’re not sure where to start or would prefer to have an expert do the legwork for you, speak to your local Liberty Adviser.

What do you need to refinance a car loan?

When you’re ready to submit your loan application, your lender may ask you to provide:

• Driver’s licence

• Proof of income

• Proof of residence

• Vehicle registration and insurance

• Vehicle identification number (VIN)

• Car loan statements

Remember, a Liberty Adviser can help you submit your application and manage the process for you.

Ready to refinance your car loan?

When it comes to refinancing, it’s important to consider the pros and cons and think about what suits your situation best.

A lending expert can help you make an informed decision, so reach out to a Liberty Adviser today and discover your options.