Car loan refinancing means replacing your existing car loan with a new one. When you refinance your old loan will be paid out in full and you will have a new loan agreement, a new lower interest rate and possibly a new term or length of loan. 

If any of the following situations apply to you it may be time to consider refinancing your car loan 

Your credit score increased

Your credit score is one of the main determining factors in qualifying for a refinance loan. If your credit score has improved since you first took out your loan it is possible you could qualify for a better interest rate which would reduce your monthly repayments and save you money. 

Interest rates have dropped

If interest rates were high when you first financed your car  you are probably paying more than you need to.  Small drops in interest rates can add up to massive savings on weekly repayments over the term of the loan.  

You didn’t shop around for rates initially

Did you pay too much for your original car loan?  If you took a car loan offer from the dealership without exploring your finance options you could be paying more interest than you need to. Our advice , check your rate against currently available car loan rates. 

Your monthly payment is too high

Are you struggling to meet your existing car loan repayments? If so refinancing your car loan and extending the term of the loan can help reduce the pressure. If you extend the term of the loan you can reduce your repayments however be warned , you will pay more for interest over the lifetime of the loan.  .

Refinancing a car loan is as simple as submitting an application to the lender just like you would with a normal car loan. You will still need to produce proof of employment and income to qualify for the new loan 

Refinancing is designed to help consumers who have a bad credit car loan get a better rate. However refinancing will only be possible if your circumstances have changed, interest rates have dropped significantly or your credit score has improved. 

If any of the following apply to you, you probably won't be eligible for a refinance car loan.

• You're behind on your payments: 
  You owe more than your car is worth: 
• You have an old vehicle: 

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The simple answer is yes. You can either lengthen or shorten the term of your car loan 

Shortening the term of your car loan will result in higher weekly or monthly repayments but will reduce the amount of interest you pay on the loan. 

In contrast, lengthening the term of your loan will result in more affordable weekly or monthly repayments, however as you have extended the time to pay back the loan, you will pay more interest on the total amount borrowed. 

Refinance car loan documentation requirements are basically the same as applying for a normal car loan.  You will need the following

1. proof of employment and income (usually in the form of payslips or BAS statement for ABH holders. 

2. 3 months of bank statements to show existing loan repayments, credit card and living expenses. 

There are a number of variables to consider when answering this question including, the amount owing, the interest rate and erm of the loan. Also any early exit fees or new loan establishment fees. If you are paying a high rate right now there could be massive savings to be had by refinancing. Here's an example. 

Refinancing a $40,000 loan from 14.99% to 8.99% will save $116 per month. Times that over the length of the loan and you will save over $6500 in interest.