4 reasons to consider refinancing your car loan during social distancing

By Tara McCabe · · 6 min read
Fact Checked
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If money troubles are at the forefront of your mind right now, you might be tossing up ways to reduce ongoing costs. One option could be to refinance your car loan. If it’s been a while since you got it, you could be missing out on a more competitive deal, plus thanks to the rise in online and non-bank lenders there are now more and more low interest car loans available.

Still need some convincing? Here are a few reasons to consider refinancing your car loan:

To find a lower interest rate 

Depending on how low your current car loan interest rate is, you might be able to find a more competitive rate if you choose to refinance. 

Car loan interest rates range widely from over 10% p.a. to under 5% p.a. In fact, at 6.88% p.a., the average new car loan interest rate is more than 2% higher than the most competitive car loan rate in the Mozo database^: the loans.com.au’s New Car Loan at 4.67% p.a. (5.22% p.a. comparison rate*).

So let’s just say you were two years into a $30,000 five year car loan. With the average rate of 6.88% p.a., over the full five year loan term you would pay around $5,540 worth of interest. Now assuming you had paid off about a third already, if you were to then refinance to a three year loan term with a rate of 4.67% p.a., you would pay around $1,415 worth of interest on the remaining balance. This would reduce your total interest payments over the course of the full five years from $5,540 to $4,125.

To reduce your monthly repayments 

By lowering your annual interest rate, you could also reduce your monthly repayments. So going back to the $30,000, five year loan term example above, with the 6.88% p.a. rate your monthly repayments would be around $592. At this rate of repayment you should have made around $14,208 in principal and interest payments already ($592 x 24 months), leaving an outstanding balance of $19,218. If you were to then refinance that remaining balance with the lower rate of 4.67% p.a., your monthly repayments would drop to $573, leaving an extra $19 in your pocket each month!

Check out Mozo’s personal loan comparison calculator to figure out how much you might be able to save on interest and monthly repayments by switching.

If your credit score has improved, you might be eligible for a more competitive rate 

Of course another factor that decides how low or high an interest rate you get is your credit score. If your credit history wasn’t looking too healthy a few years ago when you first took out the loan, you might not have been able to benefit from the most competitive rate on the market. But if you have been diligent in your repayments since then and you haven’t had any other financial issues that would negatively impact your rating, your score may just have gone up.

You should be able to access a free copy of your credit report once every 12 months through any of the major credit reporting bodies in Australia.

You can refinance your car loan online

It’s anybody’s guess as to how long social distancing will be in place for, so with that in mind you’ll be happy to know that you can refinance your loan from the comfort of your sofa. 

That’s right, with more and more car loan lenders operating fully online now, you can both find and apply for a refinance car loan online.

Make sure the savings outweigh the costs

Considering the main reason to refinance is to save you money both in the short and long term, before you switch to another loan you’ll want to make sure that the amount you save will outweigh the cost of refinancing.

Costs of refinancing could include:

  • A break free to exit your current car loan.
  • A sign-up fee for whatever car loan you decide to switch to.
  • A high annual fee on the loan you’re thinking of refinancing to.

Other factors you may want to think about are:

  • How long you have left on your current loan. If you have say less than 12 months to go until your car is fully paid off, refinancing might not be worth it.
  • How your credit score will be affected. If you’re thinking about applying for another personal loan to finance other expenses in your life, you might want to think about how switching your car loan could affect your credit score. 
  • If your car has depreciated in value, you might not be able to refinance.

Keen to find a car loan to switch to? Head to our refinance car loans hub page to see what competitive car loan interest rates are on offer right now, or check out the deals below.

Mozo may receive payment if you click products on our site. We don’t compare the entire market, but you can search our database of 91 car loans using the filters.
Last updated 5 December 2025 Important disclosures and comparison rate warning*

Car loan comparisons on Mozo

  • Promoted

    Low Rate Car Loan Excellent Credit

    • Fixed, Secured
    Interest rate from
    5.66 % p.a.
    to
    23.03 % p.a.
    Comparison rate from
    6.45 % p.a.
    to
    24.98 % p.a.
    Based on $30,000 over 5 years
    Monthly repayment
    $605
    Go to site

    Borrow up to $100,000. No monthly account or early repayment fees. Available for new or used vehicles. Fast, simple online application with loan approval in as little as 9 minutes according to Harmoney.

  • Promoted

    New Car Loan

    • up to 4 years old, Fixed, Secured
    Interest rate from
    5.99 % p.a.
    Comparison rate from
    6.34 % p.a.
    Based on $30,000 over 5 years
    Monthly repayment
    $608
    Go to site

    Fast online conditional approval. No monthly account fee. Unrestricted additional repayments. No penalty for early payout, and a fast application process. Borrow up to $125,000. Apply online in under 10 minutes.

  • Promoted

    Car Loan

    • Variable, Secured
    Interest rate from
    5.99 % p.a.
    Comparison rate from
    7.12 % p.a.
    Based on $30,000 over 5 years
    Monthly repayment
    $608
    Go to site

    Low variable car loan rate for purchasing new and demo vehicles from dealers. Personalised loan amounts between $5,000 and $150,000. Flexible repayment options. Choose between the 3 to 7 year loan terms. Good credit history. Stable employment history and Australian citizenship or PR required.

  • Promoted

    Used Car Loan

    • Fixed, Secured, No vehicle age limit, $5,000-$100,000
    Interest rate from
    5.95 % p.a.
    to
    18.99 % p.a.
    Comparison rate from
    5.95 % p.a.
    to
    21.78 % p.a.
    Based on $30,000 over 5 years
    Monthly repayment
    $608
    Go to site

    Get a competitive fixed interest rate on a secured used car loan of up to $100,000 depending on your credit score. No vehicle age limits. Easy online application. Fast pre-approval. Pre-approved funds held for 1 month. No monthly account keeping fees, no exit fees and no early repayment fees. Flexible weekly, fortnightly or monthly repayments on terms from 1 to 7 years.

  • Promoted

    New Car Loan

    • Fixed, Secured, $5,000-$100,000
    Interest rate from
    5.95 % p.a.
    to
    18.99 % p.a.
    Comparison rate from
    5.95 % p.a.
    to
    21.78 % p.a.
    Based on $30,000 over 5 years
    Monthly repayment
    $608
    Go to site

    Get a competitive fixed interest rate on a secured new car loan of up to $100,000 depending on your credit score. Easy online application. Fast pre-approval. Pre-approved funds held for 1 month. No monthly account keeping fees, no exit fees and no early repayment fees. Flexible weekly, fortnightly or monthly repayments on terms from 1 to 7 years.

  • Promoted

    Car Loan

    • Fixed, Secured
    Interest rate from
    6.54 % p.a.
    Comparison rate from
    7.67 % p.a.
    Based on $30,000 over 5 years
    Monthly repayment
    $613
    Go to site

  • Low Rate Car Loan Excellent Credit

    • Fixed, Secured
    Interest rate from
    5.66 % p.a.
    to
    23.03 % p.a.
    Comparison rate from
    6.45 % p.a.
    to
    24.98 % p.a.
    Based on $30,000 over 5 years
    Monthly repayment
    $605
    Go to site

    Borrow up to $100,000. No monthly account or early repayment fees. Available for new or used vehicles. Fast, simple online application with loan approval in as little as 9 minutes according to Harmoney.

  • Unsecured Personal Loan

    • Fixed
    Interest rate from
    5.76 % p.a.
    to
    24.03 % p.a.
    Comparison rate from
    5.76 % p.a.
    to
    24.98 % p.a.
    Based on $30,000 over 5 years
    Monthly repayment
    $606
    Go to site

    Fast, easy and 100% online, this is a low cost loan with no ongoing fees or extra repayment penalties. It's perfect for savvy borrowers with great credit. If you’re over 18 and earn above $30,000, you could qualify (other eligibility criteria may apply).

  • Debt Consolidation Loan

    Interest rate from
    5.76 % p.a.
    to
    24.03 % p.a.
    Comparison rate from
    5.76 % p.a.
    to
    24.98 % p.a.
    Based on $30,000 over 5 years
    Monthly repayment
    $606
    Go to site

    Roll multiple debts into one loan to streamline your finances with one set of repayments and one interest rate. Competitive fixed interest rates with no monthly or early repayment fees and flexible repayment options. Easy online application and funding in as little as 24 hours (subject to approval).

  • New Car Loan

    • up to 4 years old, Fixed, Secured
    Interest rate from
    5.99 % p.a.
    Comparison rate from
    6.34 % p.a.
    Based on $30,000 over 5 years
    Monthly repayment
    $608
    Go to site

    Fast online conditional approval. No monthly account fee. Unrestricted additional repayments. No penalty for early payout, and a fast application process. Borrow up to $125,000. Apply online in under 10 minutes.

Showing 8 results from 91 car loans. Use the filters to see more


^Average interest rates and calculations based on car loans available in the Mozo database, correct as of 25th March, 2020.

* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

^See information about the Mozo Experts Choice Personal Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

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