Refinance
a car

What is a car refinance loan?

A car refinance loan allows you to replace your current car finance agreement with a new one, often on better terms. This means borrowing from a new lender to pay off your outstanding balance, which could help you get lower monthly repayments, a lower interest rate, or a longer loan term to reduce costs.

Refinancing could help you reduce the cost of credit, make payments more affordable, or switch to a deal that better suits your financial situation. However, it’s important to check how refinancing might impact your credit rating and the total cost of your loan before making a decision.

At Carboom, we help you compare refinance deals from our panel of lenders, whether you’re looking to refinance a car with bad credit, reduce your interest rate, or adjust your loan term. Check your eligibility today – it’s quick, easy, and won’t affect your credit score.

Can you refinance a car?

Yes, you can refinance a car, and at Carboom, we help people do it every day. If you're paying off a car finance agreement, refinancing lets you reconfigure your loan to better match your budget. This could mean lowering your monthly repayments, reducing your interest rate, or adjusting your loan term to make payments more manageable.

If you have a Personal Contract Purchase (PCP) loan, refinancing can help you cover the balloon payment at the end of your agreement, so you can keep your car without paying a large lump sum all at once. If you're on a Hire Purchase (HP) finance plan, refinancing could help you spread the cost over a longer period or find a better deal with a lower total amount payable.

Can I get car refinancing with bad credit?

Yes, you can refinance a car with bad credit, but there are fewer options, and lenders may charge a higher interest rate. Since a lower credit score can make borrowing riskier for lenders, they often offer deals with higher refinance rates to balance that risk.

That doesn’t mean refinancing isn’t worth considering. If your current monthly payments are too high, a new deal could still help you spread the cost over a longer period. However, if you can, improving your credit score before refinancing could help you get a better interest rate and save money in the long run. Simple steps like paying bills on time, reducing debt, and checking your credit file for mistakes can make a big difference.

At Carboom, we work with lenders who consider bad credit applications, so you still have options. Check your eligibility today and see what deals might be available for you.

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

To apply for car refinancing, you’ll need to provide some key documents and details about yourself, your vehicle, and your current finance agreement. Having these ready can help speed up the process.

How do car refinance loans work?

The process is simple: a new lender pays off your outstanding balance, including the settlement figure—the total amount needed to clear your current loan. This may include an early repayment fee, which some lenders charge for settling a loan before the term ends.

Once your old finance is settled, your new finance agreement begins. This could help you:

• Lower monthly repayments – Extending the loan term can make payments more affordable.
• Reduce the total amount payable – A lower interest rate could mean paying less overall.
• Adjust your loan term – You can spread the cost over a longer period or pay it off sooner.

If you’d rather own the car outright, a personal loan could be an alternative. This option:

• Pays the loan directly to you instead of a finance company.
• Gives you full ownership of the vehicle immediately.
• Lets you repay the loan in fixed instalments.

How soon can I apply to refinance my car deal?

Most lenders allow early settlement, which means you can refinance your car loan after making at least 6 months of repayments. Some lenders may require 12 months before offering a new agreement, so it’s worth checking your finance terms first.

Before applying, consider these key factors:

• Early settlement options – Many agreements allow you to settle early, but some include settlement fees or additional costs.
• Negative equity – If your car is worth less than the remaining loan balance, refinancing could be more challenging.
• Admin charges and fees – Some lenders charge 1-2 months' interest or a percentage of the outstanding balance when settling early.

Refinancing could help you lower monthly repayments or secure a better deal. At Carboom, we work with a panel of lenders to find options that suit your needs.

How to refinance your car

1. Check your current finance agreement – Look at your outstanding balance, APR interest rate, and any early repayment fees to see if refinancing makes sense.
2. Compare refinance plans – Different lenders offer different rates and terms, so it’s worth checking if you can get a lower interest rate or better deal.
3. Get all your documents – Lenders usually ask for personal ID, proof of income, and employment details to process your application.
4. Go through a credit check – A lender will check your credit score to determine what rates they can offer. A better credit score usually means lower refinance rates.
5. Provide car details – Some lenders may ask for your registration number, mileage, and car condition to make sure your vehicle qualifies.
6. Review and sign your new agreement – Once approved, check the terms carefully before signing. Your new lender will then settle your old finance.

At Carboom, we make the process quick and hassle-free. Check your eligibility today and see if you could save money on your car finance.

Refinance PCP: Personal Contract Purchase

If you have a Personal Contract Purchase (PCP) agreement, you’ll face a balloon payment at the end of your term. This is a large final payment needed to own the car. If paying it all at once isn’t an option, refinancing could help by turning it into affordable monthly repayments instead.

At Carboom, we’ve helped many drivers refinance their PCP agreements, giving them more flexibility and control over their finances. Whether you want to keep your car or adjust your payments, we’ll work with our panel of lenders to find the best option for you.

Refinance HP: Hire Purchase

If your Hire Purchase (HP) agreement feels too expensive, refinancing could help make your monthly payments more manageable. This works by either spreading the cost over a longer period or securing a lower interest rate, which could reduce how much you pay each month.

Before refinancing, it’s important to check your current agreement for any settlement fees or negative equity, as these could affect your options. At Carboom, we’ve helped many drivers find better finance deals, even when challenges like these are involved.

Should I refinance my car?

Refinancing your car could help if you want to lower your monthly repayments, get a better interest rate, or adjust your loan to make it more manageable. But before deciding, it's important to look at both the benefits and the possible costs.

When refinancing might be a good idea

• Lower monthly repayments – A longer loan term can spread the cost, making your payments smaller and easier to manage.
• Lower interest rate – If interest rates have dropped or your credit score has improved, a new deal could save you money.
• Avoid a balloon payment – If you have a PCP agreement, you may face a large final payment at the end. Refinancing your car loan could turn this into smaller monthly payments instead of paying it all at once.
• Switch to a better deal – A new lender might offer lower interest rates, reduced fees, or more flexible terms.

What to think about before refinancing

• Early repayment fees – Some lenders charge a settlement fee if you pay off your current loan early. This is often 1-2 months’ interest or a percentage of what’s left to pay.
• Negative equity – If your car is worth less than what you owe, refinancing might not always be the best option.
• Longer loan terms – Spreading repayments over more years lowers monthly payments but could mean paying more overall.

At Carboom, we help people find the right refinancing solution for their situation. If you’re unsure whether refinancing is right for you, check your eligibility today – it’s quick, simple, and won’t affect your credit score.

Advantages of car refinance loans

Disadvantage of car refinance loans