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The refinance calculation
A defensible comparison uses today as the starting point. Ignore interest already paid because it cannot be recovered.
- Current option: formal payout amount plus remaining account or discharge fees.
- New option: amount refinanced, establishment fees, rate, term and total repayments.
- Net benefit: current remaining cost minus the complete new-loan cost.
- Cash-flow effect: repayment difference without losing sight of total cost.
Vehicle equity and lender policy
A lender may compare the refinance amount with the vehicle value. Negative equity, vehicle age, kilometres or condition can restrict available structures even when the borrower can afford the repayment.
When refinancing may not help
Small remaining balances, a short remaining term, early payout fees, a materially longer new term or a vehicle outside lender policy can make refinancing uneconomic or unavailable.
Action plan
What to do next
- 1
Request a payout figure
Use a dated formal payout rather than an estimated account balance.
- 2
Value the vehicle
Estimate current value and calculate equity before approaching a new lender.
- 3
Compare net outcomes
Use remaining total cost, repayment and term together.
Common questions
Frequently asked questions
Will refinancing always lower my repayment?+
No. The result depends on the new amount, rate, fees and term. A lower repayment can also result from extending the loan.
Can I refinance with negative equity?+
Possibly, but it is harder. Lenders can limit the amount relative to vehicle value or require the shortfall to be addressed.
Do I need a payout letter?+
A current payout figure is normally needed to settle the existing loan accurately.
Primary sources
Check the rules and regulator guidance
Reviewed by Scott Iriks, Founder of BaseRate · Last reviewed 14 August 2026.
Policy-informed guidance summarises recurring criteria from reviewed financier documents without reproducing confidential commercial material. See the lender-matching and policy methodology.
General information only. A financier determines actual eligibility, rates, fees, terms and approval after assessment.