Loan refinancing can benefit borrowers
Loan refinancing is the process of taking out a new loan, potentially with better terms and conditions, to replace one or more outstanding loans. The process does not eliminate debt, but can change the conditions in your favor and can help you accomplish your financial goals faster. Let’s look at some of the benefits of refinancing more closely:
Save money - Many borrowers who are looking to save money will choose to refinance their loans. You’re often able to pay less monthly by lowering your interest rate, which can translate into significant savings over the the life of the loan. This works especially well for long-term loans with large dollar amounts.
Lower monthly payments - Loan refinancing doesn’t only lower monthly payments through lower interest rates, you can also change the length of the loan term. Refinancing allows you to spread out payments over time, in turn lowering monthly payments.
Get cash in your pocket - Loan refinancing offers borrowers the opportunity to not only pay off old debts and adjust terms, but also get additional funds. If you take out a loan larger than your current debt, the additional funds can be cash in your pocket.
Simplify monthly payments - It can be difficult to pay multiple bills throughout the month (personal loans, credit cards, etc.). By taking out a loan to pay off all debts, you will have one easy monthly payment.
Change the loan type - Some borrowers are stuck in less-than-favorable variable-rate loans. The interest rate on this type of loan varies as market interest rates change. Refinancing into a fixed-interest rate loan allows borrowers to budget monthly expenses easier.
Accomplish your goals faster
Money saved through changing the terms and conditions of a loan allows you to accomplish your goals faster. Whether that goal is to pay off your home early or better manage your monthly budget, refinancing may be the answer. Revisit your financial goals checklist to make sure you’re on track.
You may not have to look far to refinance your loan; many times you can refinance a loan with your current lender. Check with your financial institution to see if they offer loan refinancing to current borrowers. You may be eligible today.