Refinancing A Personal Loan | Credit Help India

Refinancing a Personal Loan

A lot of people get a personal loan to invest in a new car or a house. Some also invest to join their debt. It is important to get all the information you can get about a loan before applying. There are different loans for an individual, specific agendas, and circumstances. Moreover, it is very important to understand how loans work. And, how to respond to responsibility. In a nutshell, a loan is an agreement between the lenders and which gives to the other parties. The borrower has to pay back that amount over a period that the lender determines. A loan consists of interest payments as well as other charges for the administration of the loan.

Obtaining a personal loan nowadays is not how it used to be. Back in the day, the lenders would want to see your credit score and tax returns. They would also check details of employment to decide whether to give the loan. But today we have a new breed of lenders. Lenders today factor things such as your SAT scores and your social media accounts to determine who to lend to and the amount of interest they want to charge. It is easier to get a personal loan now than it was years ago.

What is a personal loan refinance?

In simple terms, refinancing is trading one debt for another at a bank. It is different from the other one with new terms and conditions. Refinancing a loan also gives you the ability to place your old debt into a new one. Refinancing helps to get better terms and conditions. This is a type of loan subjected to refining because of its extended tenure and how much it changes from when you get the loan to the time it takes for you to repay. Omit, you can refinance any loan that is in your favour.

How to refinance your loan?

Improve your credit:Before you choose to finance, think twice if you need to or not. If you have a strong credit history, it is a good move to refinance. Before you apply do what you need to do to increase your score. The main factors that impact your credit score are your ability to make on-time payments and the amount of credit that is available. The amount of credit available is based on your credit limit. It is wise to get your free credit report and dispute any errors if you find them. If you pay your monthly payments on time and your credit score continue to increase, you are in a better position to request loan refinancing.

Compare offers from the lender: After you are done reviewing your finances and increasing your credit score, you are ready to contact your lenders of choice. You can contact them and compare their offers. Also, let the lender know up front that you are willing to go with a different lender if you do not like what the new interest rate is going to be.

Review your loan: As with any other loan, it takes a lot of time and hard work to refinance a personal loan. The process consists of tons of paperwork. You also have to review everything before you complete the loan. This process will be even longer if you decide to go with a new lender instead of sticking with the old one. Furthermore, you will have to hand over information such as your credit report and your proof of income debt.

Close out your original loan: After your lender approved you for a refinance, they must write your signature on the loan documents. It is important to note that you need to close out your form of loan first. If your loan finance is with the same lender, they will close out your form alone for you. But if it is with a new lender, it is your responsibility to close out your form alone.


Q1. Why should I refinance my loan?
Ans- If you want more flexibility with your money, join your debt, or get better term options, you may refinance your loan.

Q2. Does refinancing my loan affect my credit?
Ans- You may notice a small fall in your Credit Score due to cutting short present credit line. Rejection of refinancing application shall also lead to a decrease in Credit Score.

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