Educational
How to Refinance Your EV Loan
If you already have finance on an electric vehicle but your circumstances have changed, or you think you might be paying too much, refinancing could be worth exploring.
Here is how it works.
What Is Refinancing?
Refinancing means replacing your existing EV loan with a new one, usually with different terms. The new loan pays out the old one, and you continue making repayments under the new agreement.
People refinance for several reasons: to get a lower interest rate, to reduce monthly repayments by extending the term, to shorten the term and pay the loan off faster, to consolidate the loan with other debts, or because their financial situation has improved and they now qualify for better terms.
When Does Refinancing Make Sense?
Refinancing is worth considering if interest rates have dropped since you took out your loan, if your credit score has improved significantly, if your income has increased and you want to pay the loan off faster, if your current loan has a variable rate that has risen, or if you are on a high rate from a specialist lender and now qualify for a mainstream lender.
It does not make sense if you are close to the end of your loan term (the savings will not outweigh the costs), if your current loan has steep early exit fees, or if your vehicle has depreciated to the point where you owe more than it is worth (negative equity).
How Does The Process Work?
A broker reviews your current loan, including the interest rate, remaining balance, and any exit fees. They assess your current financial situation, which may have improved since your original application. They search their lender panel for a better option. If a better deal exists, the new lender pays out the old loan and you start repayments under the new terms.
It is a similar process to taking out the original loan, but faster because you already own the vehicle and have an established repayment history.
What To Watch Out For
Early exit fees. Check your current loan agreement for any fees that apply if you pay the loan out early. These can eat into the savings from refinancing.
Found an EV that fits your budget? The finance path needs to fit too.
We help you compare the main options for the vehicle you are considering — personal, business and novated where it applies.
Break costs on fixed rates. If your current loan is fixed-rate, there may be break costs that apply when you exit before the end of the fixed period.
New establishment fees. The new lender may charge fees to set up the refinanced loan. Factor these into your calculations to make sure you are actually better off.
Loan term reset. If you refinance into a new loan with a longer term, your monthly repayments may drop, but you could end up paying more in total interest over the life of the loan.
Test drove something in this price bracket? Mention the model and we will tailor the conversation.
Different lenders have different appetites for brands and ages — brokers shortcut the guesswork.
Vehicle value. The lender will consider the current market value of your EV, not what you paid for it. If the vehicle has depreciated significantly, the amount you can borrow may be less than what you owe on the existing loan.
For more on how EV finance structures work, see our guide on how EV finance works. And for what to look for in any finance agreement, see our checklist.
For a broader view of finance options, visit Aussie Finance Hub.