Refinancing means taking out a new loan to pay out your current one, usually to change the interest rate, the repayment or the term. It can be worth it, but only if the saving is still there once you count fees and any extra time on the loan.
When refinancing can make sense
- Rates have fallen, or your lender has not passed on a cut, since you signed.
- Your business has traded longer or your finances have improved, so lenders may now offer terms you could not get at the start.
- You started with a specialist lender at a higher rate and may now qualify with a mainstream one.
- You want a different structure, for example a different balloon or a shorter term.
- Your cash flow has changed and you need a lower repayment, knowing the total cost may rise.
When it usually does not
- You are near the end of the term, so there is little interest left to save.
- Your current contract has high early exit fees or break costs on a fixed rate.
- The asset is worth less than you owe, so a new lender may offer less than the balance.
- The only thing that improves is the repayment, because the term is much longer.
The costs to add up
Compare the full cost of staying with the full cost of switching. Include the early exit or discharge fee on the current loan, any break cost on a fixed rate, the establishment and ongoing fees on the new loan, and the extra interest from any longer term. The repayment alone does not tell you which is cheaper.
You can test your own numbers with the refinance calculator. It compares what you will still pay on the current loan with a new rate and term, including fees. It is general information only, not a quote. For the full picture on cost, see our guide to comparing the total cost of business finance.
How the process works
- Gather your current loan contract, the latest statement and the details of the asset.
- Check the payout figure and any exit fees with your current lender.
- Compare lenders on the same basis: rate, fees, term, balloon and total cost.
- If a better option exists, the new lender pays out the old loan and your repayments start under the new terms.
If you are rolling several debts into one rather than swapping a single loan, see debt consolidation loan vs balance transfer. If you are unsure what a balloon will do to the numbers, read what a balloon payment is.
The takeaway
Refinancing is worth it when the total cost over the time you will keep the loan falls, after every fee. Work out the break-even point before you switch. loan-o can compare options across 50+ lenders and review any offer for free; there is no credit check to enquire.
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Finance is subject to lender approval, lending criteria, terms, conditions, fees and charges. The information in this article is general and does not take into account your personal or business needs.
Last reviewed: 8 October 2026. This content provides general information only. It should not be treated as personal financial, tax, legal or credit advice.
Frequently asked questions.
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Not quite. Refinancing replaces one loan with another, often on a different rate or term. Consolidating combines several debts into one loan. A refinance can be part of a consolidation, but the checks differ, so compare the total cost of both.
No. A lower repayment can simply come from a longer term, which can raise the total interest you pay. Exit fees, break costs on a fixed rate and the new lender's establishment fee also count. Compare total cost, not just the repayment.
Often, yes. The new lender looks at the asset's current value, its age and what you still owe. If the asset is worth less than the balance, the amount a lender will offer can be lower than what you owe, so check this early.
It depends on the lender, the asset and how quickly your documents come together. Because you already own the asset and have a repayment history, it can be quicker than the original application, but there is no set timeframe.
No, but a broker can compare lenders and read the fees in your current contract for you. Most business borrowers pay no upfront fee to use a broker, and the broker is paid by the lender; ask for the details in writing.
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