Many borrowers assume that once their car loan settles, their repayments are locked in for the entire loan term.
In reality, some lenders offer a more flexible approach.
If you're planning to sell your current vehicle after purchasing a new one, expecting a future cash injection, or simply want the option to reduce repayments later, certain loan structures may allow you to make a lump sum payment and have your repayments recalculated without refinancing.
This process is known as loan amortisation or reamortisation.
In some cases, yes.
Rather than refinancing your loan or changing the original loan term, a borrower may be able to make a lump sum payment directly into the loan and ask the lender to recalculate the remaining repayments based on the lower balance.
The result is a lower monthly repayment while keeping the same loan end date.
This can be particularly useful for borrowers who know additional funds will become available after settlement but do not want to delay purchasing the vehicle or equipment they need today.
Let's say you're upgrading your vehicle.
You find the right replacement vehicle now, but you haven't yet sold your existing vehicle privately.
Instead of waiting weeks to complete the sale, you proceed with the new purchase and finance the full amount required.
A few months later, you sell your old vehicle and receive the sale proceeds.
Rather than keeping those funds in the bank, you make a lump sum payment into the loan. The lender then recalculates the repayments based on the reduced loan balance, resulting in lower ongoing repayments while keeping the original loan term unchanged.
The process is typically straightforward:
Not every lender offers this feature, which is why it's important to structure the loan correctly from the outset.
While lender policies can change, select lenders such as Plenti Finance, Now Finance, and Branded Financial Services offer products that may allow borrowers to make a lump sum payment after settlement and have repayments recalculated.
This can provide valuable flexibility for borrowers whose financial circumstances are expected to improve after the loan begins.
The biggest advantage is flexibility.
Rather than delaying a purchase while waiting for funds to become available, borrowers can secure the vehicle or asset they need today and potentially reduce their repayments later.
For many clients, this creates a smoother cash flow outcome and removes the pressure of having to perfectly time the sale of an existing vehicle before moving forward with a purchase.
If you're planning to sell a vehicle after settlement or expect additional funds in the future, speak with our team about lender options that may allow lump sum repayments and lower repayments without refinancing.
