Vehicle Refinance in South Africa

Vehicle refinancing in South Africa can be a clever way to save money on your monthly car repayments.
Here is what you need to know about refinancing, when to refinance, when not to and how Motorlease can help you to refinance a vehicle.

What is vehicle refinancing?

Refinancing a vehicle is securing a new loan that replaces the existing finance agreement usually with monthly payments that are lower than your existing loan. This difference can be achieved by obtaining a loan on a lower amount, extending the period, or securing a lower interest rate. Alternatively, we could refinance your vehicle that is already fully paid for should it qualify.

Motorlease Refinance of private vehicles on sticky note

Benefits of refinancing a vehicle

There are a few ways that refinancing your vehicle can benefit you. Here are four main benefits of vehicle refinancing:

1. You can reduce or extend your loan period
When you refinance a vehicle the terms of the old finance agreement are replaced by new terms giving you the ability to try and negotiate a shorter or longer loan period based on affordability. This can be very useful if your affordability changes and you want to pay off your car faster or if you need to take a bit longer.
2. You can reduce your interest rate

This is a huge benefit when looking to refinance. If you had a low credit score when you first qualified for your car loan, that would have resulted in a high interest rate. If your credit score has improved, looking into refinancing after a few years could help you receive better offers. It might be possible that your credit score has improved enough for you to get a lower interest rate.

Even if you had a good credit score when financing your vehicle, the interest rate changes fairly regularly, sometimes it goes up and other times down. If the interest rate has come down, you may be able to refinance your vehicle at a lower interest rate or fix the rate.

If you do get a lower interest rate, that means that over time you will pay less. This can also help you pay off the loan faster or lower your monthly payment.

3. You can lower your monthly payment

When you refinance your vehicle you might be able to lower your monthly payment by getting a lower interest rate or by extending the duration of your car repayment. For example, if you owe two years on your current loan, you might be able to extend that term with the new lender to four years. That would then result in a lower monthly payment. You could also add an extended warranty, payment protection plan, or credit life to your new finance agreement.

There are a plethora of reasons you may need to reduce your monthly cost, some good and some bad. You might need to lower your monthly payments, from having a baby, to unexpected medical bills, or just a rising cost of living. The freed-up funds could go to supporting your new needs.

4. You can improve your cash flow

You might be able to access more cash by refinancing your vehicle, if you owe less than what it is currently worth. 

For example, if you have had a car for three years. Let’s say that car is worth R200 000 today and you owe R120 000 on your car loan. You could potentially refinance your car for R200 000. You would then owe less than the car is worth and have an extra R80 000 available. 

You do need to be careful though, as you probably know, a car is a depreciating asset that can lose a high percentage of value in a very short period of time.

When should you refinance a vehicle?

When you are considering refinancing a vehicle, you need to be sure that it is the right time to do so. Refinancing is a decision that should not be taken lightly, so the right factors need to be considered. Here is when it would be a good idea to refinance your vehicle:

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When interest rates have dropped

Interest rates tend to change often. This means that there is a possibility that rates will be lower than when you had your car financed initially. A drop of 2 or 3 percent can result in a large amount of saving over the period of the loan. 

As you may know, interest rates in South Africa are currently at an all-time low. So, if you took out a car loan in 2018 when interest rates were almost double, refinancing now could be a great option to save on your car loan.

Stacked money indicating money saving from finance
When your financial situation improves

When you are applying for vehicle finance, there are a few factors that get taken into consideration for the cost of your monthly payment. These factors include your income, your monthly expenses and your credit score. 

When you start to earn more, this can allow you to get on top of your debt, improving your credit score. If you also keep your monthly expenses down, this can mean that you overall have better financial health. Now when you apply for a vehicle loan, you can achieve more-favourable terms.

When should you not refinance your car?

While refinancing can help you reduce your monthly expenses, there are instances where it could make your financial situation worse. Here is when you should not refinance your vehicle.


If you have paid off most of your vehicle, it is preferable that you get rid of that debt. The less you have to pay on your vehicle the more you will save on interest. This will mean that the price difference in your monthly payment will be less, and overall you will save less money.


As you know, cars depreciate quickly. This depreciation means that some lenders won’t refinance a vehicle that is over a certain age or mileage. You are usually only able to refinance a vehicle within the first few years of owning it.


There are a variety of fees you will need to pay when refinancing. It’s important to look into the cost of all of these fees. Some fees you may have to pay are:

  • Bank initiation fees
  • Refinance facilitation fees

Make sure you are aware of these fees and how they will impact your overall costs before committing to refinancing.


Whenever you apply for a loan this results in a hit on your credit score. A tip to keep a good credit score is that you should not apply for anything resulting in debt too regularly. So, if you are looking to secure a bond in the near future or have other responsibilities that you need credit for, applying for refinancing could hinder rather than help you.

Interior of private car that has been financed
How to Refinance Your Car

If you have decided that refinancing your vehicle is the best option for you, then follow the finance application procedure.

Have the Right Documents

When applying for vehicle refinance you will need certain information on hand. The information and documentation you will need to provide are the following: 

  • Valid ID
  • Valid driver’s license
  • Proof of income in the form of three most recent payslips and a minimum of three months’ original bank statements stamped by the bank. 
  • Proof of address
  • Settlement letter

You can contact us to find out if you qualify for car refinancing. This unfortunately does not guarantee that you will be approved for refinancing, but it will give you an indication whether it is a possible option for you.


One of the major benefits of applying for vehicle finance through Motorlease is that we will apply to all the major banks with one application. This will ensure that you get the best possible deal, while not adversely affecting your credit score.


At Motorlease we can help you refinance your vehicle while helping you maintain a good credit score. You can apply  for refinance or private vehicle finance through Motorlease today.

When applying through Motorlease, check our used car applications requirements. If you have any questions, please do not hesitate to ask