While your car loan may only run over a couple of years, that doesn’t mean you shouldn’t take the chance to compare some of the best car loan rates around and potentially make the switch to a better value deal. Refinancing is that easy. It’s simply making the move from one car loan to another and hopefully saving you some money along the way. It might seem like a hassle, but with our handy car loan comparison table you’ll be able to compare some of the lowest car loan rates around with a single glance, to see just how much you could save.
What should I consider before refinancing?
With plenty of low car loan rates on the market below 6.50%, now could be the time to do a rate check with your own car loan rate. But hold up one minute! Before you start the process of refinancing and making the switch, make sure you consider any fees you’ll need to pay. It can also be worthwhile weighing up whether car loan refinancing is the most convenient option for you to take, after all, making the switch might not be worthwhile if you’re already four years through a five year loan.
So if you’re considering refinancing your car loan, make it easy for yourself by using our handy car loan switch and save calculator. By plugging in a few simple details about your current loan and provider, our calculator will be able to show you just how much you could save on your car loan repayments if you were to refinance.
Just how much would refinancing save me?
Every car owner with a loan is going to be in a different situation when it comes to how much they’ll be able to save by refinancing. It may even be the case that you won’t be able to save at all because you’ve already bagged yourself one of the best car loan rates around. But in case you haven’t, here’s an example to illustrate the benefits refinancing your car loan could have on your wallet.
Two years ago, Emma and her partner purchased a second-hand 2015 Mitsubishi ASX. In order to buy it, they took out a car loan with an interest rate of 8.21% on which they still have $20,000 left to pay. Even taking into account a $200 upfront fee, if Emma made the switch to a low rate car loan with an interest rate of 6.50% she would end up saving $365 over the final three years of her loan.
Interested in finding out how much you could end up pocketing yourself by refinancing? Enter your current car loan figures into the Mozo car loan switch and save calculator to get started.
What documents do I need to refinance?
Because you’ll be switching lenders when you refinance your car loan, you’ll need to have a few documents ready to go in order for the approval process to run quickly and smoothly.
- Identification: Whether it’s your car loan or credit card, with any financial application you make you’ll need to prove that you are who you say you are. That’s why you should have some sort of identification, like a drivers licence, passport or your medicare card, at the ready when you’re looking to refinance to a new car loan.
- Address: Aside from your identity, you’re new lender is also likely to ask you to provide proof of your address. If you own your own home then a mortgage statement will do the trick, while if you’re renting you’ll need to fish out your tenancy agreement or even a bill or council notice with your address on it.
- Finances: You’re taking out a loan after all, so you’re going to need to provide your new lender with some proof that you’ll be able to pay them back. This means offering up something like a payslip, or series of payslips, to show your ongoing income, as well as a savings account statement from your bank to demonstrate proof of savings. Your new lender may also ask you to provide records of any debt you currently owe.
- Insurance: Depending on the lender, you may also need to provide proof that you have a comprehensive car insurance policy on the vehicle which you’re seeking the car loan for.
Are there any catches to refinancing?
Of course. Sometimes the car loan rate you’re currently getting could be very competitive, or it might just not be convenient for you to make the switch if you’re at the end of your loan period.
On top of rates and convenience, you’ll also need to factor in any exit, sign up or ongoing fees you’ll need to pay if you switch from one loan to another. Not all car loan providers charge fees, but for those that do, you could be looking at hundreds of dollars in costs. For example, car loan sign up fees in the Mozo database range anywhere from $0 to $995.
What is my choice of refinancing lenders?
If you do decide to refinance your car loan you’ll have plenty of choice when it comes to choosing a new lender. Some of the different types of lenders you can choose between include:
- Online lenders: Many of the most competitive rates in the Mozo database are from online lenders or traditional lenders offering low rates for online loan deals. If you’re looking to refinance to a low rate deal and like the idea of a simple application process, an online car loan offer could be the right option for you.
- Peer to peer lenders: Like the idea of online providers that reward borrowers with excellent credit history? Peer to peer lenders offer some of the most competitive car loan rates around for borrowers who have managed their credit well in the past.
- Big banks: If you’d rather opt for a more familiar face, there are plenty of car loan rates on offer from the big four banks as well as other traditional lenders.
How else can I save on my car loan?
Aside from cutting down your repayments by refinancing to a cheap car loan, there are a couple of other tricks which could help you save money on your car loan.
Switch your repayment frequency
If you haven’t already, your first step should be switching your repayment frequency from monthly to fortnightly or weekly repayments. That’s if your car loan provider gives you the flexibility to do it. You won’t be paying any extra, but it’s a simple way to cut down the overall interest you’ll pay over the life of your loan. For example, let’s say you have a $25,000 car loan with an 8.21% interest rate. According to the Mozo car loan repayment calculator, by making weekly repayments instead of monthly ones, you could net an extra $106 in your pocket in saved interest over the life of a five year loan.
Make extra contributions
The vast majority of lenders will allow you to make extra repayments on your car loan, so if you’ve got the room in your budget, or you get a sudden windfall, it makes sense to pay off your debt as soon as possible. Just bear in mind that some lenders do charge a penalty if you pay off your loan earlier than anticipated, generally fixed rate loans, so be sure to check these details out beforehand.
Can I use a car loan on a bike?
Short answer, most of the time. Car loans are just a different variety of personal loans and can be used for a wide variety of reasons. However there are occasions where you might want a more specific vehicle loan, whether this is a bike loan, a boat loan or something completely different.
Grab a better rate from the start
If you’re sold by the idea of refinancing to a better car loan deal halfway through your loan, make sure you do the same when your next on the market for a new or used car loan. Just imagine how much interest you could save by opting for a low rate car loan deal from the start.
But don’t stop there! If you’re set on refinancing to a better car loan rate, make sure you do the same for all of your banking products. Whether that’s making the move to a savings account with a more rewarding interest rate, or refinancing your home loan, comparing rates on all your products could be an easy way to save you money.