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I know, more than anyone, that understanding lending and loans can be a headache. Maybe you want to lower a rough interest rate, or you need to pay less every month. I have had opportunities where I just wanted to change the mortgage company that made me look into refinancing. So yes, while it may seem smart to refinance a personal loan through your lender, I want you to think a bit longer.
Should I Refinance My Loan?
Refinancing a loan means that you’re really taking out a second loan to help change the repayment structure. It’s smarter to refinance a loan than to shop personal loans a second time!
I’ve heard that refinancing a loan can save money, and most times, it’s true. I can’t argue. But there are a lot of things to think about, including the lender themselves.
Forbes made a great list for us:
“5 Signs It’s Time To Refinance“
● Better Interest Rate
● Your Credit Score is Higher
● Your Adjustable-Rate Loan is Changing
● Big Expense
● You Need to Pay Less
If you find yourself in one of these positions, read on!
The Advantages to Refinance a Personal Loan
One of the most common answers to this little problem – bringing down those personal installment loans and the rates they bring. I know that when I’m having problems paying bills on time, it would be great to have an option like this!
You can also refinance a personal loan to get a quick amount of money. That won’t necessarily make your repayments easier! I would advise this only for important purchases, like a vehicle or reducing your debt from a site like this here.
The Disadvantages to Refinance a Personal Loan
There are also risks here! I suggest you read your current loan conditions. Some lenders include a penalty fee when you look to refinance. There can also be fees for refinancing personal loans: bank fees, paperwork fees, even an attorney.
The great folks at credit.com tell us this in simple words: “Most refinance options require paying closing costs and, in some cases, mortgage points-fees that go to the lender in exchange for lower interest rate(s)[…] Keep in mind the associated costs vary from lender to lender, so be sure to shop for the best mortgage refinance options available to you.” If you need loans for bad credit then you should read more there!
Before you shop personal loans and refinancing options, it’s smart to read your paperwork!
To Refinance a Personal Loan with Your Current Lender
I’m getting back to our original question – your current lender. Will they help you or hurt you in the long run? Truthfully, I have to say it could be either!
If your current lender can give you better interest rates, lower fees, and avoid penalties… Go for it. The simple answer is that if it saves money, it makes sense. Maybe interest rates have dropped? Maybe you can decrease the installments and pay it quicker?
You also sometimes can refinance a personal loan from variable rate to a fixed rate loan! Ethan Taub wrote a great piece on the process to refinance a personal loan with your lender.
To Shop Personal Loans Again – Refinance a Personal Loan with a New Lender
If the fees are too high, the rates are not good enough, I know you’re with me on looking for new lenders. Just to change your personal installment loans can be difficult to refinance perfectly. But there is still hope.
I remind you to look first for those pesky hidden fees. Do a little leg-work in your research, you’ll thank me later. How?
Get estimates on your refinanced fast cash loans, easy as that. Potential lenders must give you an estimate within three days. That’s all there is to it!
Off to Refinance a Personal Loan like a Pro!
If you keep all this in mind (the fees, the rates, the wonders!), you’ll be refinancing in no time.
