Is It Worth Refinancing Your Personal Loan or Car Loan?

Summary:

Deciding on Whether refinancing a personal loan or car loan is worth it comes down to three things: your repayments, the fees and your goal. This guide walks you through each one so that you have all the accurate information to make the best decision possible about refinancing your loan.

• Your car and personal loan rates are set by each lender, not the Reserve Bank of Australia (RBA), so waiting on the cash rate is the wrong test.
• Refinancing can lower your repayments through a sharper rate or a longer term, and the two are not the same trade-off.
• Most variable loans have no early-exit fee, so switching often costs little, but a fixed loan can carry a break cost.
• Easing a tight month by re-amortising can help, as long as you know it usually adds interest over time.
• Rolling higher-rate loans and cards into one personal loan can break the minimum-payment trap and give you a single due date.
• The cash rate has held, yet lenders are already competing for refinancers, so the decision is about your structure and goal.

You have paid your car or personal loan on time for a year or two. Now you are wondering if a better deal is out there. It is a fair question. Whether it is worth refinancing a personal loan or car loan sits on three things: your repayments, the fees, and your goal. This guide takes each one in plain language. No jargon, no pressure, just what actually decides it.

________________________________________________________________________________________________________________________________________

Car and personal loan rates have been dropping despite the RBA lifting rates

Your car and personal loan rates are set by each lender, not by the Reserve Bank of Australia. Lenders price these loans on their own funding costs and how hard they are competing for your business. So a cash rate cut is not the trigger to watch. The better question is whether a sharper deal already exists for your situation right now.

The Australian Securities and Investments Commission (ASIC) put real numbers behind this. Its 2026 review of car loans, Report 832, looked at more than 350,000 loans across eight providers. It found the same borrower could be offered materially different deals depending on the lender and the channel. In practice, the gap between a fair deal and an expensive one is often the lender, not the cash rate.

________________________________________________________________________________________________________________________________________

Could refinancing your car or personal loan actually lower your repayments?

Refinancing can lower your repayments in two ways. The first is a lower interest rate. The second is a longer term that spreads the balance out. A lower rate is the clean win, because you pay less without stretching the loan. Stretch the term instead and the weekly figure drops too, though it can add interest over time. Which lever fits depends on your budget and your goal.

Here is a real example. A customer was sitting on a dealer-arranged car loan at 12.45% p.a. We reviewed it and moved them to 9.69% p.a., which cut their repayments from $294 a week to $218 a week, around $300 a month back in their pocket. The car was a used 2023 build and their credit file was still young, so this was not a spotless-profile-only result. If your aim is to refinance a car loan to lower repayments, that rate gap is where the saving lives.

A lower rate versus a longer term, the honest difference

Extending the term lowers the monthly repayment but increases the total interest you pay over the life of the loan (MoneySmart). Some lenders let you re-amortise, so your repayments reduce in line with extra amounts you have already paid off. The trade-off is easy to picture. Lower now can mean more later, unless you keep the term the same or shorter.

________________________________________________________________________________________________________________________________________

Will exit or early-payout fees wipe out the saving?

Often, no. Many car and personal loans in Australia have no early-exit fee, so paying one out to refinance usually costs little (MoneySmart). Fixed-rate loans are different. They can carry a break cost, so check the contract first. Before you switch, ask your current lender for a written payout figure that itemises the principal, any accrued interest, and any exit or closure fees.

How penalties for early-payout can outweigh the savings of a lower rate

The catch is usually hidden in a cheap-looking rate. On one dealer loan we reviewed, a low advertised rate carried a roughly $500 early-payout fee that only bit at the three-year mark. That kind of fee can wipe out the saving, which is why fee disclosure matters as much as the rate itself. Fox Finance Group weighs up all of the options including fees, rates and features like early-payouts, so that we can lay out the full picture before you commit to anything.

________________________________________________________________________________________________________________________________________

Re-amortising to ease a tight month, and the honest trade-off

If a month is tight, refinancing or re-amortising can lower your repayment to give you breathing room. That can be a sensible reset, and there is nothing wrong with using it. The honest trade-off is that easing the repayment usually means paying more interest over time, unless you make extra repayments later or pay the loan out early.

If you are already struggling to meet your repayments, a new loan is not the first answer. Speak with a free, independent financial counsellor through the National Debt Helpline on 1800 007 007 first. It costs nothing, and they are on your side.

________________________________________________________________________________________________________________________________________

Rolling higher-rate loans and credit cards into one payment

Rolling several higher-rate debts into one personal loan can cut your total repayment and give you a single due date. It works best when a card or two, and maybe a loan, are each charging more than one tidy personal loan would. One customer combined two credit cards and two loans into a single personal loan at 8.49% p.a. Their repayments fell from about $480 a week to $204 a week, on one weekly date, with no early-payout penalty.

When you consolidate loans and credit cards this way, the real win is control, not just a smaller number. There is an honest catch, though. Rolling a short debt into a longer loan can increase the total interest you pay, so the goal is to keep the term as short as you can manage. Because that customer’s loan had no early-payout penalty, extra repayments clear it faster. For a closer look at rolling debts into one loan, our guide walks through how it works.

Escaping the minimum-payment trap

Paying only the minimum on a credit card maximises the interest and stretches the payoff out for years (MoneySmart). Mixed weekly, fortnightly and monthly due dates pile mental load on top. One payment on one date is easier to plan around, and it frees up attention as much as cash. This is where a personal loan that fits your budget can do real work.

________________________________________________________________________________________________________________________________________

Refinance now, or wait for the RBA?

You do not need to wait for the Reserve Bank. As of August 2026 the cash rate has held at 4.35% (RBA), and all four major banks forecast no cut before 2027. Yet since the June hold, 18 lenders have trimmed at least one variable rate to win new and refinancing customers (Fox Finance Group market monitoring, August 2026). Competition is already moving beneath a still cash rate, so the decision is about your loan’s structure and your goal, not the RBA’s next move.

When you compare, look at the comparison rate, not the headline rate alone. It rolls the interest and most fees into one figure, so it shows the real cost of the loan.

________________________________________________________________________________________________________________________________________

Is refinancing your loan right for you?

A personal loan refinance is worth pursuing if a few of these sound like you:

• Your current rate is higher than what is on offer today.
• You are juggling several repayments and losing track of due dates.
• You want one payment you can actually plan around.
• Your loan is variable, so switching costs little.

If you are already unable to meet your existing repayments, a new loan is not the fix right now. A free financial counsellor through the National Debt Helpline (ndh.org.au, 1800 007 007) is the better first call. Either way, a review costs nothing and does not commit you to anything.

________________________________________________________________________________________________________________________________________

Ready to review your car or personal loan?

At Fox Finance Group, we compare car and personal loans from 50+ lenders and 100s of options, to find you the best loan on the market. We show you the real cost of each option over the full term including: rate, fees, residual, structure, and every other factor that matters when you weigh up your options.

We have helped people right across Australia fund what matters most for 20 years, with $1 billion-plus in processed applications and over 1,100 five-star Google reviews. You can read about what people are saying about our team here

If you’re ready to compare your car and personal loan options and see what’s out there, you can get started online now, or reach out to our friendly team on 1300 665 906.