The short answer: to refinance a car loan, you take out a new loan with a different lender, which pays out your existing car loan in full. You then repay the new lender, ideally at a lower rate or on better terms. Refinancing makes sense when the savings outweigh any exit fees on your old loan and the setup fees on the new one.
Noma Finance compares your current car loan against a panel of around 25 lenders and shows you the total cost of switching, including any exit fees, before you sign, so you only move if the numbers work. Founder Ashley Van Rosmalen worked at car dealerships before becoming a finance broker, so she knows how dealer finance gets set up on the day, and why so many people sign a rate they would never choose with time to compare. Refinancing is your second chance at that decision.
You refinance a car loan by getting a payout figure from your current lender, comparing new loans on total cost, and applying with the new lender. Once approved, the new lender pays out your old loan directly. The old loan closes, and you start repaying the new one.
Refinancing a car loan makes sense when a new loan costs less in total than your current one, after every fee is counted. That usually happens in one of four situations.
It usually means the loan is arranged through the dealership's finance partners, on a fixed rate, often with add-on insurance bundled in. That is convenient, not necessarily competitive. It also does not lock you in forever. Once the car is yours, you can check whether a refinance would lower the total cost.
The saving from refinancing a car loan is the difference in total interest, minus the cost of switching. Here is an illustrative $25,000 balance with four years left, moved from 12% to 8%.
Keeping the same four-year term saves about $1,800. Stretching to five years gives the lowest repayment at about $507 a month, but cuts the saving to about $700, because you pay interest for longer. Shortening to three years saves the most, about $2,900, if the higher repayment fits your budget. For a sense of where rates sit right now, our guide to current car loan interest rates has the latest ranges.
A secured car loan is a car loan where the car you are buying is used as security. The lender registers a security interest over the car on the PPSR until the loan is repaid. Because the lender carries less risk, secured car loans usually have lower rates than unsecured personal loans.
Moneysmart notes that most car loans are secured, while unsecured loans are mainly for used cars. A security interest is not ownership. The car is registered in your name, and the lender's interest is removed once the loan is paid out.
When you refinance a secured car loan, the security simply moves from the old lender to the new one. If you are still weighing up loan types, our guide to car finance options in Australia compares them side by side.
How much you can borrow with a car loan depends on your income, your existing debts, your living expenses and the value of the car. Lenders work out what you can comfortably repay each month, then cap a secured loan at what the car is worth. Your debt-to-income position usually matters more than your credit score.
Most people are told their credit score is the problem, when the real issue is how much existing debt they carry. Closing an unused credit card before you apply can make a bigger difference than you expect. Our budget planner shows what repayments fit before you talk to a lender. If you are buying rather than refinancing, our step-by-step guide on how to get a car loan walks through the full process.
A broker compares car loans across a panel of lenders rather than offering one bank's product. When you refinance through a broker, someone checks your current contract, works out the real cost of switching, and only recommends a move if it saves you money.
At Noma Finance, we start with your payout figure and current contract, then compare rate, fees, term and total cost across around 25 lenders. Where a lender charges exit fees, we can flag it up front and match you to a lender without them if early repayment matters to you. You see every number before you sign, and in most cases there is no cost to you, because the lender pays the broker's commission. You can see everything we help with on our services page.
Yes. Most lenders will refinance an existing car loan, paying out your current lender and taking over the security on the car. Approval depends on your income, existing debts, living expenses and the car's value and age.
It is worth it when the new loan costs less in total than your current one, after early repayment fees and setup fees are counted. Compare the total interest over the term, not just the monthly repayment.
Each formal application is recorded on your credit file. Comparing first and applying once keeps the impact small. Making repayments on time on the new loan builds your history from there.
Yes, many lenders will refinance a balloon payment into a new loan. Approval depends on the car's current value and your situation. A new term spreads the lump sum out, though interest applies over that term.
There is usually no minimum wait, but check your contract first. Fixed rate loans may charge an early repayment fee, while variable rate loans usually do not.
A secured car loan uses the car as security for the loan. The lender registers a security interest on the PPSR until the loan is repaid. Secured car loans usually have lower rates than unsecured personal loans.
It depends on your income, existing debts, living expenses and the car's value. Lenders assess what you can comfortably repay, then cap a secured loan at what the car is worth.
Yes. A broker compares your current loan against multiple lenders, flags any exit fees, and shows the total cost of switching before you sign. In most cases there is no cost to you, as the lender pays the commission.
Ashley Van Rosmalen is the founder of Noma Finance, an Australian finance and asset brokerage. Ashley has personally held every loan type Noma helps with, from car and personal through to home and business finance, so the guidance comes from experience rather than a script. Read more about Ashley and the team at https://www.nomafinance.com.au/about-us.
General information disclaimer. This article is general information only and does not take into account your objectives, financial situation or needs. It is not financial or credit advice. Any rates, repayments and figures shown are illustrative only, correct as at the date shown, and will vary with your situation and the lender. Consider whether the information is right for you, and seek advice from a licensed professional before making a decision.
Credit Representative 544208 is authorised under Australian Credit Licence 389328. Van Rosmalen Group Pty Ltd, trading as Noma Finance.
Last updated: 7 October 2026
Sources last checked: 7 October 2026
Written by Ashley, founder of Noma Finance. Before becoming a finance and asset broker, Ashley worked at car dealerships, and has personally held every loan type Noma helps with. Noma compares options across a panel of lenders to help people find finance that fits their situation, explained in plain English.
This article is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial, credit or tax advice. Consider whether it is appropriate for you and seek advice from a licensed professional before making a decision. Tax outcomes for novated leases and chattel mortgages depend on your circumstances, so speak with a licensed tax adviser or accountant. Any figures used are illustrative only.
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