When and How to Refinance Your Personal Loan
Learn the right time to refinance your personal loan and how to get better terms. Save money with strategic refinancing.
By Aria Loans Editorial Team · Educational information, not personalized financial advice.
Refinancing your personal loan can save you money or lower your monthly payments. Here's how to determine if refinancing makes sense for you.
What is Loan Refinancing?
Refinancing means taking out a new loan to pay off your existing loan, ideally with better terms.
When to Consider Refinancing
Your Credit Score Has Improved If your credit score has increased significantly since you took out your original loan, you may qualify for a lower interest rate.
Interest Rates Have Dropped If market rates have decreased, refinancing could save you money.
You Need Lower Payments A longer loan term can reduce monthly payments (though you'll pay more interest overall).
You Want to Pay Off Debt Faster Refinancing to a shorter term with a lower rate can help you become debt-free sooner.
The Refinancing Process
- Check your current loan terms and remaining balance
- Review your credit score
- Shop around for new loan offers
- Calculate potential savings
- Apply for the new loan
- Use new funds to pay off old loan
Calculating Savings
Consider: - New interest rate vs. old rate - Any origination fees - Remaining loan balance - New loan term
When Refinancing Doesn't Make Sense
Avoid refinancing if: - You're close to paying off your loan - Fees exceed potential savings - Your credit has worsened - You'll extend your debt significantly
Explore personal loan options
- Personal Loans
- Unsecured Personal Loans
- Personal Loans for Emergency Expenses
- Home Improvement Personal Loans
- Personal Loan Options with Bad Credit
- Debt Consolidation Personal Loans
Guides by state, credit, and amount · Borrowing resources · Blog · Editorial standards · Check my rate
Aria Loans is a free comparison service for unsecured personal loans, not a lender. Compare available offers through a network of 30+ lenders; you are not guaranteed an offer from every lender. Checking offers uses a soft credit pull that does not affect your credit score. A lender may perform a hard inquiry if you proceed. Approval, available amounts, rates, funding times, and terms are not guaranteed and depend on the lender.