When it comes to personal finance, Australians tend to “set it and forget it”. But unfortunately, this can cause you to miss out on competitive deals that could save you thousands.
According to Finder, one in seven Australians have a Personal Loan, and whether out of loyalty or laziness, they may choose to stick with their Personal Loan lender for the duration of their loan.
Whether your goal is to consolidate debt or secure more competitive loan terms, Personal Loan refinancing can help you get more value out of your loan. But can you refinance a Personal Loan, and what’s the process? In this blog, we’ll define Personal Loan refinancing and explain what you need to consider before moving forward.
What is Personal Loan refinancing?
Like refinancing your home loan, Personal Loan refinancing refers to the process of taking out a new loan to replace an existing Personal Loan. There are many reasons why someone would want to refinance their Personal Loan, such as:
- Access more funding — Refinancing your Personal Loan not only lets you access additional funds but also provides flexibility in how you use the money. Whether it’s for home renovations, further education or a major purchase, the extra cash can be instrumental in achieving your goals.
- Reduce your interest payments — One of the most significant advantages of refinancing is the chance to secure a loan with a lower interest rate. By doing so, you can save a substantial amount over the loan term. Even a slight reduction in the interest rate can translate into significant savings, freeing up your finances for other essential expenses.
- Boost your monthly cash flow — Refinancing allows you to renegotiate the terms of your Personal Loan, which can lead to lower monthly payments. This can significantly improve your monthly cash flow, making it easier to manage day-to-day expenses and save for other major financial goals.
- Switching to a more competitive offer — If it’s been a while since you looked at your Personal Loan deal, chances are, there may be a better offer out there. And by refinancing, you can take advantage of new, more competitive offers. This might include lower interest rates, reduced fees or additional perks that can improve the overall value of your loan.
How many times can you refinance a Personal Loan, and what it means for your credit score?
How often can you refinance a Personal Loan? As often as you like! Legally, there is no limit to the number of times you can refinance your Personal Loan. However, there are a few things to consider before you decide to refinance for the second or third time.
As we know, Personal Loan refinancing involves taking out another Personal Loan and replacing it with another. This process can temporarily have a negative impact on your credit score, as each credit application you make is recorded on your credit file. If you are refinancing your Personal Loan multiple times, this can be seen as a red flag by credit bureaus.
To minimise the impact Personal Loan refinancing can have on your credit score, it’s best to only refinance your loan when you absolutely need to. You should also ensure you make your repayments on time each month to maintain positive credit habits.
What to consider before refinancing your Personal Loan
So, you’ve decided to refinance your Personal Loan in the hopes of securing a better deal. Great! But before you can get shopping around on Personal Loan deals, it’s important to be sure the ends justify the means. At Finance One, we’re all about helping our customers make more informed decisions, which is why we’ve outlined a few considerations to make before signing the dotted line. Ask yourself:
- Does my current loan have any exit fees? — Determine if your current loan includes break or exit fees for early repayment. These kinds of fees can impact the overall cost-effectiveness of refinancing.
- What is the likelihood of approval? — Before applying for another Personal Loan, don’t forget to assess your creditworthiness and research the approval criteria of potential lenders. Understanding the likelihood of approval can save you time and effort in the application process and protect your credit score.
- Will it actually help me save? — Depending on the amount you borrowed and current loan terms, switching to another loan may not actually be the most cost-effective solution. Take the time to compare the new loan’s interest rate, fees and terms with your current loan and consider the total amount to be repaid over the loan term. This will help you determine whether it’s actually worth switching.
Refinance your Personal Loan with Finance One and get access to fair and competitive lending
If you’re considering refinancing your Personal Loan, you can consider Finance One as your trusted financial ally. With a reputation for reliability and customer-centric solutions, we offer a range of refinancing options designed to suit diverse needs, even for those with poor credit histories.
Our commitment to transparent terms, competitive rates and responsible lending ensures a hassle-free and financially rewarding experience. Find out how you can refinance your Personal Loan with Finance One by getting in touch today.
Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information.
