Can you refinance a car loan?

Happy couple sitting in new car on adventure

If you’re looking to save money on your car loan repayments or interest rate, or borrow some more money, you may be wondering can you refinance a car loan

The short answer is, generally yes! You can refinance a car loan but there are some things you need to consider before refinancing. The main question you must ask is, will the refinance help you reach your financial goals, such as:

  • Saving money;
  • Borrowing more money; 
  • Getting better loan features; or
  • Switching lenders.

With those reasons in mind, we’ve put together the steps for refinancing a car loan to help you understand the process.

How can you refinance a car loan?

Step 1: Make an appointment

To begin the process, make an appointment with your lender. It’s also good idea to bring a statement for your current car loan too so you can talk about your current balance, interest rate and repayments. 

Things that you’ll have to consider are: 

  • Are you eligible to refinance?
  • Will you be paying any exit fees or other costs to pay-out your existing car loan? 
  • Will the new repayments suit your budget?
  • Will any cost savings make up for the cost to refinance? 

Step 2: Eligibility for the new loan

If you’ve made the decision to apply, the lender will normally ask for some specific information about your eligibility for a new loan. 


Refinancing a car loan is usually a very similar process as applying for a new car loan. You’ll normally need to meet all the usual eligibility criteria for applying for new credit including income, expenses and good credit history. 


The age of your car can determine whether you’re eligible to apply for a car loan or a personal loan. Your lender will let you know during the application. 

For example, at Heritage if your car is still relatively new (less than 7 years old) you may be eligible for a Car Loan. Our Car Loan has a lower interest rate than our Personal Loan because your car is used to secure your loan. If your car is older you may instead need to apply for a Personal Loan. Your car may still be used as security, but as its value may have decreased since you first purchased it, it might not fully secure your new loan. 

Step 3: Get supporting documents together

If you’re application is looking good, you’ll need to get some supporting documents together for your lender. If you haven’t already, you would need to provide statements for your existing car loan. Other documents may be required such as pay slips, bank statements and proof of comprehensive car insurance if your car is being used as security. If your applying at Heritage, our Personal Loan Application Checklist can help you tick off what you may need.

Step 4: Finalise your application

If your loan is approved you’ll be asked to get an official payout figure for your existing car loan by calling your current lender. You’ll also need to sign your new credit contract. Make sure to read and understand your credit contract details closely and that it all matches your discussions with your lender. 

Once your application is processed your existing car loan will be paid out and your new loan will start. Make sure you cancel any regular payments to your old car loan and set up repayments for your new loan.  

If you’re considering refinancing your car loan, our car loan repayments calculator or personal loan calculator can help you crunch the numbers. If you’re ready to chat to Heritage Bank about your refinance, enquire online, give us a call on 13 14 22 or talk to one of our staff at your local branch. 

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