Change Car Loan? Here's How to Save Big (2026)

Are you currently feeling trapped by your car loan and wondering if you can change it? You're not alone. Many Australians find themselves in this situation and seek ways to improve their financial circumstances. Whether it's about getting a better rate, reducing monthly payments, or switching lenders, changing a car loan can be a game-changer. Let's explore how you can navigate this process and make informed decisions.

Understanding Car Loan Refinancing

Car loan refinancing involves replacing your existing car loan with a new one, usually with different terms. This can lead to benefits like reduced interest rates, lower monthly payments, or even a shorter loan term. However, it's crucial to understand that refinancing may not suit everyone. Your financial situation, credit score, and market conditions will play a significant role in the feasibility and benefits of refinancing.

Current Market Information and Options

As of 2026, the Australian car loan market is competitive, with interest rates ranging from 6.49% to 12%. The rate you receive will depend on several factors, including your credit score, the loan term, and the lender you choose. With over 83 lenders available through Esteb and Co, you have a variety of options to consider.

Eligibility for refinancing typically includes having a good credit score (usually above 650), consistent income, and a vehicle that holds sufficient value. It's essential to review your current loan agreement and refinance options carefully to ensure potential savings outweigh any fees or penalties.

Steps to Change Your Car Loan

Changing your car loan involves several important steps. Here's a practical guide to help you through the process:

1. Evaluate Your Current Loan: Start by reviewing your existing loan terms, including the interest rate, remaining balance, and any fees for early repayment.
2. Check Your Credit Score: A higher credit score can help you secure better refinancing terms. Obtain a free credit report and address any inaccuracies.
3. Research and Compare Lenders: Use resources like Esteb and Co to explore options from a wide range of lenders. Compare interest rates, fees, and loan terms.
4. Calculate Potential Savings: Use online calculators or consult with a financial advisor to determine the potential savings from refinancing your car loan.
5. Apply for Pre-Approval: Once you've identified a favourable lender, apply for pre-approval to understand the terms you qualify for.
6. Review Final Offer: Carefully review the final loan offer, including all terms and conditions, before making a commitment.
7. Complete the Refinancing Process: If everything aligns with your goals, proceed with the refinancing by signing the new loan agreement.

Tips and Considerations

Refinancing a car loan can offer significant financial relief, but it's important to consider these expert tips:

• Watch Out for Fees: Some loans have early repayment fees that could negate the benefits of refinancing.
• Consider the Loan Term: A longer loan term can lower monthly payments but increase the total interest paid over time.
• Negotiate with Your Current Lender: Before switching, check if your current lender can offer better terms.
• Stay Informed: Keep up with market trends and interest rates, as these can affect your refinancing options.

Frequently Asked Questions

1. Can I refinance my car loan if I have bad credit? Yes, but it might be more challenging to secure favourable terms. Consider improving your credit score before applying.
2. How often can I refinance my car loan? There’s no limit to how often you can refinance, but it’s essential to weigh the costs and benefits each time.
3. Will refinancing affect my credit score? Refinancing can temporarily impact your credit score due to credit inquiries, but the long-term impact is usually minimal if you maintain timely payments.
4. What are the costs associated with refinancing? Costs may include application fees, early repayment fees from your current loan, and any additional charges from the new lender.
5. Can I refinance my car loan with the same lender? Yes, some lenders offer internal refinancing, which might be simpler and quicker.
6. What documents are needed for refinancing? You typically need proof of income, identification, and details of your current loan and vehicle.
7. Is it worth refinancing for a small interest rate reduction? Even a small reduction can lead to substantial savings over the life of the loan, especially if your loan balance is significant.