People use personal loans to cover various expenses, such as creating an emergency fund, large purchases, or making repairs. If a borrower currently has a personal loan, they may be wondering whether they can refinance to a loan with a lower interest rate or more manageable monthly payments. Here are some personal loans that can be refinanced and how to refinance a personal loan so borrowers can decide if this option is right for them.
What kinds of personal loans can borrowers refinance?
Borrowers can refinance several types of personal loans, including:
Cash advances
Cash advances are short-term, small-dollar loans that can give borrowers a few hundred dollars to cover expenses before their next payday. These loans can come with higher interest rates, making them a good candidate for refinancing.
Title loans
Title loans are secured loans that use the borrower's car title as collateral. Borrowers can receive a loan amount worth a percentage of their vehicle's appraised value. The borrower can drive their vehicle while the loan is outstanding, but if they can't pay it back, the lender can repossess their car to recoup the loss. So, many borrowers can benefit from refinancing their title loans.
Installment loans
Installment loans are lump sums borrowers pay back in fixed payments of principal and interest. Many borrowers refinance installment loans to secure lower interest rates and save money.
How to refinance a personal loan
Here's how borrowers can refinance a personal loan:
1. Shop around
Borrowers should first spend some time shopping around to find the right loan. Some lenders may charge more fees or interest than others, so shopping around can save money on a refinance. Borrowers can also consider refinancing with their current lender if they have a good refinance offer.
2. Prequalify
Prequalification allows borrowers to see if they're likely to get approved for a loan before formally applying. By prequalifying, borrowers can minimize hard inquiries that damage their credit when applying.
Sometimes, lenders send prequalification offers in the mail. They'll have a code the borrower can use to claim their offer.Otherwise, some lenders may have prequalification tools on their websites. Borrowers just need to provide some basic information, such as their name, income, and refinancing amount.
3. Fill out an application
Once a borrower has a prequalification in hand, they can apply for the loan. They'll have to provide information regarding their name and income, then agree to a hard inquiry. If approved, the lender will offer the borrower loan refinance terms.
4. Sign the paperwork and get funded
If the borrower likes the offer, they'll simply sign any necessary paperwork and provide the lender with a bank account to deposit the loan into. The lender will then disburse the funds within a couple of days.
5. Pay off the old loan
Finally, the borrower can use their new loan funds to pay the old loan. They can then begin repaying the new loan.
Refinance a personal loan
Borrowers can refinance all kinds of personal loans to secure a lower interest rate. The key is to start by shopping around to find great rates. After that, the borrower should prequalify through a few lenders before applying for the loan option they choose. Ultimately, borrowers should research all their options before making a decision to get a refinancing loan that's right for their needs.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.
Contact: michael.bertini@iquanti.com
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Original Source: Advance America: Can Borrowers Refinance Personal Loans?
