Can I Refinance My Car?

If your circumstances are much the same as when you started your car finance, a refinancing deal might not be worthwhile. But if things have changed, it can be an excellent way to optimise your finances.

As costs increase (and salaries freeze), you may need to reduce your monthly outgoings. By refinancing your car, you can take out a new deal with a longer-term – meaning lower monthly repayments and more disposable monthly income.

Remember that this might not be the best overall financial strategy, as you might pay more interest. However, it’s a good option if you need to reduce your monthly outgoings.

Even if you’re not struggling monthly, you might want to consider refinancing. Interest rates constantly fluctuate, and the deal you locked into might be worse than what’s available now.

If your credit rating has improved since you first took out the deal, you might be able to find a new loan with a lower interest rate – you’d be paying less overall.

If you’re at the end of a PCP agreement, you might want to pay the balloon payment to keep the car. However, this is usually a few thousand pounds and may be challenging to pay off in one go. If you take out a refinancing loan, you can split the cost over a new agreement term for affordable monthly repayments. However, due to an extended financial period, this may result in paying more overall.

One of the main benefits of a PCP deal is that you have a few options. The most common one is to return the car to the dealer and take out a new PCP deal on a newer car. You can also choose to hand the car back and walk away.

Another option at the end of a PCP is to pay a balloon lump sum to pay off the car and become the owner. This sum usually comprises the car’s current value, usually a few thousand pounds.

You can refinance a balloon payment and avoid worrying about coughing up a few thousand upfront for the balloon payment.

Of course, you will end up paying interest, whereas you wouldn’t if you paid the balloon payment without financing.

How long after getting a car loan can you refinance? You might think you must wait until the end of your contract term to refinance. However, that’s not true! You can take out a new policy and settle what you owe for the current arrangement.

You can find a deal with lower monthly repayments (as it’s over a longer term than what’s left on your initial car finance deal).

If you want to pay as little as possible on interest, you could find a new finance agreement with a lower APR, meaning you spend less overall on your car.

Many finance providers offer car refinance. It’s a super simple process. After you’re approved, your new lender will pay off the existing car finance. And you’ll begin paying the lower monthly payments to the latest finance agreement.

You can refinance on a car with bad credit; working with a large panel of lenders means we can find the right car refinancing deal for you, no matter your circumstances.

Not confident in your credit score? Don’t worry – we work with many lenders specialising in offering credit to those with a low credit rating.

Instead of a PCP, you might want to consider a Hire Purchase car finance deal. A Hire Purchase has fewer options than a PCP but is significantly more straightforward.

Essentially, you ‘hire’ the car until your final repayment. After that, you own it outright. Your monthly payments will be higher than with PCP because you pay off the car’s total value.

Even if you refinance to a Hire Purchase deal from a PCP, you’ll likely be paying a lower monthly repayment. That’s because of the depreciation of the car.