Refinance Car Loan

What’s your monthly budget?

Rates from 9.9% APR. Representative APR 13.9%. We are a credit broker, not a lender.

Representative example: Borrowing £7,500 over 60 months with a representative APR of 13.9%, flat rate of 7.25% and deposit of £0.00, the amount payable is £170.98 per month, with a total cost of £2758.68 and a total amount payable of £10,258.80.

Jumpstart your car finance

Could spreading the cost of your existing deal put you in a better financial position? Refinancing your car could be the answer if you’re looking for lower monthly repayments, a better interest rate or to pay off your PCP balloon payment.

What is car refinancing?

Refinancing your car means replacing your existing car finance agreement with a new one. People who refinance their car typically do so to get better terms based on their circumstances, whether that’s lower monthly payments across a longer period, a better interest rate or a manageable way to pay the balloon payment at the end of their PCP contract.

How does refinancing your car work?

Refinancing is a fairly simple process. You agree on a new finance deal with a new lender, who’ll then pay off your existing finance agreement. You’ll then start paying off your refinanced loan under the new conditions. Refinancing is available for all major finance methods, including personal contract purchase (PCP), hire purchase (HP) and personal car loans.

The road to refinancing starts with checking whether you’re likely to be approved for finance with one or more of our lenders. You can do that by using our free, soft credit check– it takes two minutes to apply and you’ll get a decision in minutes.**

Why should I refinance my car?

The simple answer is if it makes your finance agreement easier to manage. Most car finance contracts last two to four years, which leaves plenty of time for your financial circumstances or priorities to change. If they do, a new finance agreement on different terms might make more sense than your existing one. A refinanced loan can:

Lower your monthly repayments

Regardless of the type of finance deal you go for, whether that’s PCP, hire purchase or something else, you’re expected to keep up with the financial terms you agreed to. If, for whatever reason, your monthly payments become unmanageable, refinancing can spread the cost of your existing loan over a longer term, lowering your monthly financial commitment to a level you can afford.

However, spreading the loan cost will likely increase the total cost of the agreement, meaning even though you’re paying less per month, you’ll owe more overall.

Make your PCP balloon payment more affordable

If you’re on a PCP deal and want to take ownership of the car at the end of your term, you’ll need to pay the optional balloon payment. PCP deals are structured so that up to 50% of the total cost of the agreement is saved for this balloon payment, which typically makes it a substantial amount that many people can’t afford to pay in one go.

If you refinance your balloon payment, your new lender will pay it off and then spread that cost over a new loan. Whether you take ownership of the vehicle when you take out the new loan depends on the type of finance you go for. If you refinance via a personal loan, your lender will give you the cash to pay the balloon payment and take ownership of the car there and then. If you refinance via hire purchase, the vehicle will remain owned by your new lender until the finance is fully paid off.

Just remember, refinancing your balloon payment means paying more interest, so you’ll end up paying more in total over the course of your new contract.

Offer a better interest rate

If you’ve taken out car finance with a high interest rate, you might be able to find a lower one elsewhere via a new loan. Refinancing with a better interest rate can lower the total amount of interest you owe and, in some cases, even make the total cost of your deal and the associated monthly payments cheaper.

You might be able to find a better interest rate if determining factors like your credit score, income or affordability have improved since you took out the original finance. Finding a lower interest rate doesn’t always equal less to pay, though – you may find that even though you’re paying a lower interest rate on a new deal, you may have more interest to pay overall if it’s spread over a longer term.

Pay off your finance quicker

If you find yourself in an improved financial position since taking out your agreement, you can refinance on a shorter contract to pay your deal off quicker. Condensing your deal means less interest accrues on the loan, too, so you’ll likely pay less overall. But it also means higher monthly repayments, which you’ll need to be sure you can manage.

Advantages of refinancing

Refinancing your car isn’t a decision to be taken lightly, as doing so usually means committing to longer-term or different conditions that you’ll need to stick to. Like any finance agreement, there are pros and cons to refinancing that to consider. If you’d like to talk things through with us, you can always speak to a member of the Hippo team who’ll present your refinancing options fairly, so you can make the right decision.

Reshape your finance deal to better suit your circumstances

Refinancing is all about making your car finance more manageable. Whether that’s adjusting your contract length to lower your monthly payments (or to shorten the deal and pay it off quicker), finding a better interest rate or breaking up the cost of your PCP balloon payment, refinancing offers you that flexibility.

Avoid financial trouble

If the financial obligations of your contract have become too much for you to manage, refinancing offers a solution that keeps your car finance on track without breaking your budget.

Disadvantages of refinancing

Refinancing means getting out of your existing agreement early, which often means early settlement and administrative fees to pay before you can move on to your new contract.

If you’ve refinanced to lower your monthly payments by extending your repayment period, you’ll have interest to pay across that longer period, too. That means you may have to pay more overall.

Refinancing may affect your credit score.

Why refinance your car with Hippo?

We’re bad credit specialists who work with a diverse panel of lenders, many of which have higher approval chances for bad credit applicants. So, if you’re worried about refinancing with bad credit, we’re expertly placed to help.

Wondering about if you’re likely to be approved for finance with one of our lenders? You can get a clear idea of where you stand with our free soft credit check.

Our end-to-end service takes care of the complicated parts of refinancing for you. We’re a trusted service, too – take a look at our ‘Excellent’ reviews on Trustpilot.

We also provide a dedicated account manager to every customer, so you can work with someone who understands exactly what you’re looking for.

Car refinancing FAQs

Can I refinance my car with bad credit?

We’re here to help with that. As bad credit specialists, we work with a selected panel of lenders open to working with applicants with poor credit. Of course, it’s easier to get a refinancing agreement with good credit – and there’s no guarantee of approval with bad credit – but we pride ourselves on helping those that others won’t.

If you’re looking to apply for refinancing with bad credit, the best place to start is our free soft credit check, which will let you know whether you’re likely to get finance through us.

Will refinancing my car affect my credit score?

Potentially, yes, but there are a variety of factors which may impact your credit score either positively or negatively. When you apply for refinancing formally, a hard credit check will be carried out, which may cause a temporary dip in your score. Taking out a new credit agreement can affect various credit score-impacting factors, for better or worse, too.

The good news is that refinancing is designed to put you in a better financial situation, which usually means a positive long-term impact on your credit score comes hand-in-hand with getting a better deal for your needs.

Can I refinance if I’m in negative equity?

Yes, but being in negative equity (meaning your car is worth less than the amount you have left to pay on your deal) can make refinancing more difficult. Many lenders have different approaches to offering new finance to negative equity applicants. Some flat out don’t do it, others roll the negative equity into a new loan, others extend the refinancing period or offer a personal loan to pay the difference immediately.

It all depends on your situation and the lender concerned, but we’ll be able to help make sense of that process for you. Just be prepared that, in some instances, you may need to clear the negative equity yourself before applying to refinance.

Are there any fees to pay for refinancing my car?

It depends on your current agreement, but you may face early resettlement fees and/or admin fees in order to close off your old contract and begin your new one. You also need to consider the new interest rate you’re taking on, which may be higher to compensate if you’ve opted for more manageable monthly payment amounts.

Can I refinance my car with the same lender?

Normally, you’ll refinance with a new lender, but refinancing with the same one isn’t unheard of. Some lenders offer refinancing options to adjust your payments or term length to a more suitable number, while others might insist you refinance with another lender. When you come to refinance through Hippo, we’ll do the shopping around for you, so we’ll let you know where the best rates are, so you can make the right decision.