Refinancing your car loan

What is car re-financing

Loans are not always negotiated on the best terms. Car re-financing enables you to pay off your current car loan with a new renegotiated loan. Your current car loan and title are transferred to a new lender and you will make your monthly car loan payments to this new lender.

Advantages of car refinancing

Refinancing your car loan can have some or all of the following benefits:

  • You may be able to get a lower interest rate on your car finance
  • You may be able to lower your monthly loan installments
  • You may be able to pay off the balance of your car loan quicker
  • You may be able to receive a slight break (up to 2 months) from paying your installments
  • If your current loan value is greater than your car's actual value (called an upside-down loan), car refinancing can correct this

Ultimately, car refinancing can save you a lot of money, both in the short and long term. If you have high monthly installments, a high interest rate or an upside-down loan, car finance may be ideal for you.

Disadvantages of car refinancing

Car refinancing has a few minor drawbacks, but these are negligible in most cases where the financial benefits are right

  • If your current loan has been negotiated on good terms, car-refinancing may not be beneficial to you
  • There may be negative effects on your credit score in applying for finance again
  • There may be additional finance fees

Do I qualify for refinancing?

Before applying for car re-finance, make sure that you and your vehicle meet the following general requirements for South Africans. Failing to meet these requirements could result in you not being eligible for vehicle re-finance (please note that different re-finance institutions will have varying requirements):

  • The car has not been rebuilt or stolen/recovered.
  • The value of the car is R45 000 or more.
  • You have a valid South African driver's licence.
  • You have a clear credit record.
  • You earn more than R6500 a month
  • You are a South African citizen.
  • The car is not older than 2001

Example of how car re-financing can benefit you

If you obtained car finance to purchase a car 36 months ago for R260,000 with the following statistics:

Finance contract balance:R 260,000
Interest Rate:Prime + 3%
Monthly installment (at start):R 5,999
Current monthly installment:R 6,699
Current settlement:R 96,000

By refinancing this loan on the settlement amount of R 96,000 the new installment figure could be as low as R2,650, resulting in a monthly saving of R4,049.


There are many scenarios where getting vehicle re-finance could benefit the applicant significantly. If you currently have a car loan, it is worthwhile to get an obligation free refinancing quote to see how you too can save money.
Click here to obtain a car finance or car refinance quote through our trusted finance parter.