Should you refinance your car or truck loan?

Refinancing means replacing your current vehicle or equipment loan with a new one, usually to get a better rate, lower repayments or a structure that suits you better. It's worth reviewing your loan every year or two, especially if your situation has changed.

When refinancing can make sense

• Your rate is higher than what you could get today.
• Your credit or business has improved since you took out the loan.
• You want lower repayments to free up cash flow.
• A balloon payment is coming up and you'd rather not pay it in one hit.

Costs to check first

• Early payout or break fees on your current loan.
• Establishment fees on the new loan.
• The total cost over the life of the loan, not just the repayment amount. A longer term can lower repayments but cost more overall.

Refinancing a balloon payment

If your loan ends with a balloon you can't pay in full, you can often refinance that amount into a new loan and keep the vehicle. Start looking a couple of months before it's due, so you have time to compare options.

This guide is general information only and doesn't take into account your objectives, financial situation or needs. It isn't financial, tax or legal advice. Talk to us about your situation, and to your accountant about tax.