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Refinance Personal Loan

Refinancing a loan means that a person takes out a new loan to pay off an existing loan usually at a lower interest rate. Refinancing a loan doesn’t mean that the debt is eliminated it is merely transferred to another lender.

It can be difficult to refinance a personal loan because personal loans are direct advances of cash to borrowers. Many lenders will not refinance personal loans because personal loans are often made to low income people who are bad credit risks.

A person who has the income to take out personal loans should be able to take out another personal loan with a lower interest rate and pay the loan off directly.

When to Refinance a Personal Loan

There are many reasons to refinance personal loans but the main one is to eliminate high interest loans taken out in emergency situations. A person who needs cash fast may take out a personal loan or get a personal loan from an individual then take out a traditional loan to pay off the personal loan.

An individual would do this because traditional loans often take awhile to get. Banks and other traditional lenders often require credit checks and lots of paperwork that take time.

Paying off a personal loan quickly can help a person save money by eliminating lots of loan interest. It can also help a person pay the loan off quicker.

Mortgage for Personal Loan Refinance

One excellent source of personal loan refinance is a person’s home. If an individual owns a home and has equity in it they can borrow against the home and use a second mortgage or home equity line of credit to pay of the personal loan off.

An individual should do this because mortgage and home equity line of credit interest is usually much lower than personal loan interest. Another advantage to such an arrangement is that an individual usually has several years to pay off a mortgage. Personal loans on the other hand have to be paid back very quickly.

Where to Refinance Personal Loans

There are some other sources of personal loan refinance available including bank loans and lines of credit. An individual can get a bank loan especially a revolving line of credit will usually be able to get a lower interest rate than that offered by personal lenders.

Another good source of personal loan refinance is to approach friends and family members. A good way to refinance a personal loan is to ask these individuals for another loan. This could help a person reduce their interest rate and increase the time of loan repayment.

It may also be possible work with a lender to refinance personal loans. A borrower with a history of paying off loans and making payments on time might able to negotiate with the lender for better terms or lower interest.

A good suggestion is to ask the lender if it would be possible to get a better deal on the loan. Remember it never hurts to ask and persons especially those who are good customers might get a better deal on to refinance a personal loan.