Car refinance loans

Compare car refinancing

Refinance my car Explore personal loan options

Compare car refinance deals through our trusted partner Car Finance 247
Getting a refinance quote does not impact your credit score

Rates from 8.9% APR and representative APR 15.9%, based on all deals done between July and September 2024. Car Finance 247 is a credit broker, not a lender, who will offer you the best deal that you're eligible for from their wide panel of lenders. To apply you must be a UK resident aged 18 or over. Credit is subject to status and eligibility.

Find the right car refinance deal for you from Car Finance 247’s trusted lenders, including

What is a car refinance loan?

A car refinance loan allows you to borrow money to pay off the outstanding balance on an existing car finance agreement.

If you’re in the middle of your contract, refinancing could potentially help you reduce your monthly repayments, finance term, or interest rate. Or if you’re at the end of a PCP contract, you might want to refinance to cover the final balloon payment.

Car refinancing may involve taking out a new Personal Contract Purchase (PCP), or Hire Purchase (HP) agreement to pay off the outstanding balance on your existing car finance loan. You could also refinance by taking out a personal loan.

How do car refinance loans work?

How a car refinance loan works depends on the type of agreement you want to set up.

If you’re refinancing onto a new PCP or HP deal, your new lender should handle the details for you. They will settle the outstanding balance on your existing deal with a one-off payment. Under the new agreement, you’ll repay this amount, plus interest, each month over an agreed period of time.

By taking out a new car finance agreement, you’re effectively buying your car again, but with different terms tailored to you, which may be more favourable.

Regardless of the new finance product you choose, if you’re refinancing your car with a personal loan, you’ll need the settlement figure to find out how much you should borrow. This may include an early repayment fee if you’re leaving in the middle of a car finance agreement.

If you’re approved for a personal loan, you can use the money to settle the outstanding balance on your car. This means you’ll own the car outright. You’ll then need to repay the loan including interest, in monthly instalments over a fixed period.

How to refinance your car

1. Choose a refinance plan

Your monthly repayments will be based on the APR interest rate, amount you’re borrowing and the length of your contract agreement. You’ll typically need a good credit score to be eligible for the best car refinance rates.

2. Provide information

Car refinancing will involve a credit check. You’ll also need to supply any additional information stipulated by your lender’s eligibility criteria.

3. Undergo vehicle checks

If you’re refinancing to a new Hire Purchase deal, you’ll need to undergo any vehicle checks required by the new lender. This could include confirmation of ownership and the condition of the vehicle.

4. Sign your agreement

Once the necessary checks and paperwork have been completed, you’re good to go.

Can I get auto refinancing with bad credit?

It can be harder to find car refinance with bad credit. It’s not impossible, but your options may be limited.

You might be able to find a lender that specialises in car loans for bad credit. But it’s likely you’ll be charged a higher interest rate than someone refinancing with a good credit rating.

If you want to cut your monthly repayments by refinancing to a lower interest deal, it makes sense to build your credit score first. This could give you access to better car refinance rates.

Should I refinance my car?

Whether you should refinance your car largely depends on your reasons for doing so.

If you’re looking to reduce your monthly repayments, refinancing to a lower interest deal could potentially save you money. Or if you’re eligible for a lower interest deal, you may think about keeping your monthly repayments the same but reducing your term, which will in turn reduce the total amount repayable. If your credit score is in good shape, a personal loan with a low interest rate could work out cheaper than signing up for a new car finance agreement.

If you can’t get a better interest rate, moving to a longer contract is another way to lower your monthly repayments. Just bear in mind you’ll be paying interest for longer, so increasing the length of the loan may cost you more overall.

If you’re at the end of a PCP agreement and you can’t afford the final balloon payment, a personal loan might work for you. It will enable you to keep the car, while fixed monthly repayments could make it easier to budget. A personal loan also means you can sell the car at any time.

Before you decide if car refinancing is the best option, you should also consider:

Potential fees – some lenders may charge an early repayment fee (ERC) for terminating your agreement mid-contract. Check if an ERC applies as you’ll need to factor it into the settlement figure.
Negative equity – if your car has depreciated a lot in value, you could end up owing more on the loan than the vehicle’s current worth. This could make it harder to find a lender willing to offer you a refinance loan.

If you’re not sure about refinancing your car, talk to our partners at Car Finance 247. They can help you find the right option for your circumstances. Car Finance 247 works with a trusted panel of lenders including those who offer negative equity car finance and bad credit car finance.

Advantages of car refinance loans

A lower interest rate could significantly reduce your monthly repayments
If your credit score’s improved, you’ve a better chance of accessing the best car refinance rates
Refinancing at the end of a PCP contract lets you keep the car while spreading the cost of the final balloon payment.

Disadvantage of car refinance loans

You could be charged an early repayment fee if you refinance before your current contract ends
Increasing the length of your loan usually means you’ll pay more interest overall
PCP and Hire Purchase agreements are secured against your car, so it could be repossessed if you can’t make the repayments
The terms and conditions of your new agreement may be different to your original contract
You might not be offered a better deal than your existing finance
If your car is in negative equity or your credit score has dropped, you may find it harder to find a car refinance loan.

About Car Finance 247 Limited (Car Finance 247)

CarFinance 247 Limited (Car Finance 247) is one of the UK’s leading car finance brokers (based on unique users) uniting buyers, car dealers and finance providers. Car Finance 247 acts as a credit broker, not a lender, which means it will show you and distribute products offered by lenders.

Advice is provided by Car Finance 247, who are authorised and regulated by the Financial Conduct Authority (653019).

Car Finance 247 is not part of Compare the Market Limited. Compare the Market receives a % of the commission that our partner Car Finance 247 earns. All applications are subject to lending and eligibility criteria.

Car Finance 247 will not charge you a broker fee should you decide to proceed with a car finance product.

Am I eligible to refinance my vehicle?

Eligibility criteria to refinance your vehicle can vary between lenders. But typically, to be eligible for a car refinance loan you’ll need:

To be over 18 years old
To have a minimum of three years’ address history in the UK.

What do I need to apply for a car refinance loan?

To apply for a car refinance loan, you may need to provide some details about yourself and your current car deal, including:

Personal ID and proof of address
Car registration number, make and model
Current mileage
How much you owe on your current deal (a settlement letter)
How much time is left on your current agreement
Bank details
Employment details.

When you apply through Car Finance 247, you’ll be paired with a dedicated account manager who will guide you through the refinancing process.

Apply now

Why apply for car refinance through Compare the Market?

Search for car refinance deals from Car Finance 247’s panel of trusted lenders
Choose from a range of refinancing products including PCP, Hire Purchase and Personal Loans
Car Finance 247 considers all credit histories: your credit score won’t be affected when you apply.

Car refinance loan calculator

If you’re looking to refinance your car with a personal loan, use our car finance calculator to get a rough estimate of how much it might cost.

Once you have a settlement figure, you’ll know how much you’ll need to borrow. Our handy tool can give you an idea of how much your monthly repayments are likely to be and how much interest you might pay overall.

Try our car finance calculator

What our expert says...

“If your credit score’s improved, or your circumstances have changed since you took out your original car finance deal, you may be able to benefit from lower car refinance rates.

But whichever way you choose to refinance your car, remember the golden rule – never borrow more than you can afford to pay back.”

- The Editorial Team, Experts in personal finance, insurance and utilities

Frequently asked questions

When can I refinance my car?

In theory you could refinance your car at any time. You may not need to wait until your current contract ends. But some new lenders may only offer you a deal if you’ve been on your existing agreement for a certain amount of time – for example, 12 months.

You should also check to see if there are any early repayment charges for cutting short your original contract.

Can I refinance my car loan with the same lender?

If you can negotiate a better deal, you may be able to refinance your car loan with the same lender. However, most people prefer to refinance with a new provider.

Is it worth refinancing?

If you can find a deal with a lower interest rate or a longer term to cut your monthly costs, car refinancing might be worth it.

But you’ll need to consider your current credit score and personal circumstances. Market conditions and interest rate changes could also impact the APR that lenders are willing to offer.

Does refinancing a car hurt your credit?

Refinancing might lower your credit score in the short term. This is because you’re taking out a new form of credit. But as long as you keep up with your repayments and pay on time, your credit score should recover and even improve.

If you had a good payment record with your original lender, your current credit score may already reflect this. It may be higher than you think. A good credit score will give you a better chance of getting a competitive deal when you refinance.