You’ve probably heard the term “refinance.” You may have even seen offers to access more cash by refinancing your current loan. If you’re wondering what it means – and what it entails – this is the post for you.
What does it mean to refinance a loan?
Refinancing (refi, for short) is the process of taking out a new loan and using that money to pay off an existing loan.
When does it make sense to refinance a personal loan?
Your credit score has improved since you first applied.
Generally, you can refinance a loan at any time, but borrowers who see the greatest benefit from a refi are those who have improved their credit scores since taking out their initial loan. Making consistent, on-time payments on your personal loan is a great way to build and boost credit, so make sure you are checking your score and taking advantage of refi opportunities once yours is on the rise.
You want to decrease the dollar amount of your monthly payments.
Refinancing a personal loan is also a good way to lower your payment amount by extending your repayment period. By doing so, you will pay less money per payment, but make a greater number of payments over a longer duration of time.
You want to pay off your loan faster – cutting the number of payments.
On the flip side, maybe you’ve set a goal to pay off your loan debt sooner. By refinancing, you can arrange a new payment amount and schedule to help you repay your debt and reduce the total number of payments you’ll make – as well as the amount of interest you’ll pay over time.
If you are a current World customer, reach out to your local branch to learn more.