Can borrowers refinance personal loans?
LOS ANGELES, April 05, 2022 (GLOBE NEWSWIRE) — People use personal loans to cover various expenses, such as building an emergency fund, major purchases or repairs. If a borrower currently has a personal loan, they may be wondering if they can refinance 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 types of personal loans can borrowers refinance?
Borrowers can refinance several types of personal loans, including:
Cash advances are small, short-term 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 are secured loans that use the borrower’s car title as collateral. Borrowers can receive a loan amount equal to a percentage of the appraised value of their vehicle. The borrower can drive their vehicle while the loan is in progress, but if they cannot repay it, the lender can repossess their car to recover the loss. Thus, many borrowers can benefit from refinancing their title loans.
Installment loans are lump sums that borrowers repay in fixed installments of principal and interest. Many borrowers refinance installment loans to get lower interest rates and save money.
How to refinance a personal loan
Here’s how borrowers can refinance a personal loan:
Borrowers should first spend time shopping for 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.
Prequalification allows borrowers to see if they are likely to be approved for a loan before making a formal application. By prequalifying, borrowers can minimize difficult requests that hurt their credit when applying.
Sometimes lenders send out prequalification offers in the mail. They will have a code that the borrower can use to claim their offer. Alternatively, some lenders may have prequalification tools on their websites. Borrowers just need to provide some basic information, such as their name, income, and refinance amount.
3. Complete an application
Once a borrower has prequalification in hand, they can apply for the loan. They will need to provide information regarding their name and income and then agree to further investigation. If approved, the lender will offer the borrower the terms for refinancing the loan.
4. Sign the documents and get funding
If the borrower likes the offer, he will simply sign all the necessary documents and provide the lender with a bank account to deposit the loan into. The lender will then disburse the funds within a few days.
5. Repay the old loan
Finally, the borrower can use the funds from their new loan to repay the old loan. They can then start repaying the new loan.
Refinance a personal loan
Borrowers can refinance all kinds of personal loans to get a lower interest rate. The key is to start by shopping around for great rates. After that, the borrower has to prequalify with a few lenders before applying for the loan option they choose. Ultimately, borrowers should research all of their options before making the decision to get a refinance loan that’s right for them.
Notice: The information provided in this article is provided for guidance only. Consult your financial advisor about your financial situation.
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