Individuals finding their existing personal loan repayment challenging due to high-interest rates or are unsatisfied with the lender's services may consider refinancing with a new lender.
Refinancing a personal loan can be defined as getting a new loan to repay an outstanding loan. Lower lending rates and increased repayment tenure are the primary driving factors for opting for a personal loan refinance facility. It helps borrowers to decrease the loan EMI (Equated Monthly Instalment).
What to Consider While Refinancing a Personal Loan
Foreclosure Fee
It is one of the expenses associated with personal loan refinancing. The customer needs to pay this fee to the existing lending institution to close the loan account as he/she is closing the loan before the end of the applied tenure.
Interest Rates
Since reducing the borrowing cost is the primary factor of the personal loan refinance option, compare the loan interest rate. Calculate how much savings will be offered with the new interest rate by the new lender. Customers can use an online personal loan calculator available at the lender’s official website to help to know the overall savings with refinancing.
Processing Charges
The new lender can levy a processing fee to open a new loan account. However, it is a negligible processing fee with renowned lenders.
This way, borrowers can consider personal loan refinancing to reduce the borrowing cost with the new lender. While choosing a new lender, customers should use an online personal loan calculator to know the eligibility and know interest payouts. It helps to compare borrowing costs of personal loans.
