Do you have multiple debts which you struggle to keep track of and you require some extra help? Similarly to debt consolidation, refinancing loans can do just that. Put your trust in Simple Personal Loans and we will be able to help you. Carry on reading for more information!
You need to make sure that it is the correct thing for you to do. It is not for everyone, so make sure you understand what they are and how they work before applying.
How Does A Refinancing Loan Work?
Refinancing Loans are the process of replacing an existing debt with another debt under different terms. In other words, it is where one loan is replaced by another loan and the new loan is used to pay off the original loan. So, the existing loan is paid off early with funds which have been borrowed from another loan. It only refers to loans paid off before their maturity date; if a loan is paid off at maturity, the second loan is simply new financing, not a refinancing.
Am I eligible for a Short Term Loan?
In most cases of refinancing loans, both individuals and business’ are eligible, but you still have to fit the criteria which we request. As both a lender and a broker, we have to make our criteria as varied as possible as some lenders who are in our panel may have slightly different terms. Read our eligibility criteria here.
Is Refinancing A Loan A Good Idea?
When you refinance a personal loan, you’re replacing the current loan with a new one. The funds from the new loan are used to pay off the old one. Refinancing a personal loan is a personal preference. Sometimes it can be a good idea if you find the right deal, and other times, there is not any point.
Benefits of Refinancing Loans
Refinancing is done to take advantage of lower interest rates, to reduce monthly payments, to consolidate debt, or to free up cash. Not only this, refinancing loans help to put all your debt in one place to make it easier to manage.
Freeing up cash is one of the biggest pro’s when considering if you should get a refinancing loan. Extra cash flow can provide more room in your budget, relieving the stress of meeting monthly payments, such as rent, bills and essentials. As well as this, if you are a business, you could result in more profit or re-invest.
Risks of Refinancing Loans
Of course, they can raise some affordability concerns, so you have to be very careful that you’re switching to a facility with suitable terms and rates for your situation, and not taking on too much risk. Another risk is it will affect your credit score. When you refinance debt, your lender will do a check on your credit reports. This may negatively impact your credit rating in the short-term. Although, if you repay your debts on time and in full, it won’t be an issue in the future.
Does Refinancing A Personal Loan Hurt Your Credit?
Refinancing a personal loan comes with a risk of affecting your credit score. Although, it won’t lead to a permanent drop in your credit score because if you can keep on top of your payments your credit score will start to increase again. As followed are multiple ways your credit score may be affected when refinancing:
- Credit Checks
- Multiple Loan Applications
- Closing An Account
Refinancing Auto Loans
Refinancing an auto loan is one of the most common ways people refinance. People refinance auto loans to save money in the long run as they may have found a better deal. Before doing so, you need to ensure that you can understand when and why you should be refinancing an auto loan. For more information on auto and car loans click here.