Key highlights
- Refinancing may improve repayments or free up cash flow
- Worth exploring if your circumstances have improved
- Watch for exit fees and extended-term costs
- Refinancing is not always worthwhile — compare first
- One broker weighs your loan against 80+ lenders
Refinancing an existing business car loan can, in the right circumstances, improve your repayments or free up cash flow. It is not always worthwhile, though, so it pays to understand when it makes sense. Here is what to consider.
What does refinancing a car involve?
Refinancing means replacing your current business car finance with a new arrangement, potentially with a different lender, rate, term or structure. Businesses consider it for a range of reasons, including seeking a more competitive indicative rate, adjusting repayments to suit changed cash flow, or handling a balloon payment that is falling due. The aim is usually to make the finance work better for the business as it stands now.
When does refinancing make sense?
Refinancing may be worth exploring if your circumstances have improved since you first borrowed, if your current rate looks uncompetitive against the market, or if you want to restructure the term or repayments. It can also be a way to manage an upcoming balloon rather than paying it out in one go. Whether it delivers a genuine benefit depends on your specific numbers, subject to lender criteria.
What are the costs of refinancing?
Refinancing is not free of trade-offs. There may be fees to exit an existing arrangement or establish a new one, and extending the term could increase total interest even if repayments fall. Running the full comparison, not just the headline rate, is essential. Any tax treatment of the refinance should be confirmed with your accountant or registered tax adviser before proceeding.
How to check if refinancing is worth it
Overdrive Business Vehicle Finance can compare your current finance against options across a panel of more than 80 lenders through one broker, Simon Kendrick, to see whether refinancing may benefit you. Request an obligation-free quote. The first check is a soft enquiry with no impact on your credit score and no obligation to proceed.
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