Compare refinance personal loan rates in 60 seconds

Personal loan refinancing is possible on most loans. I’ve seen borrowers do it to get a better rate, borrow a bit extra, or extend their loan term.

If you’re refinancing to save money, whether it’s actually worthwhile is a different question.

You’ll need to make sure it'll pay off based on the switching costs. But a lot of the time it is. And if the numbers check out, personal loans refinancing can actually be fairly simple to do.

Refinancing is usually associated with a home loan. But personal loan refinancing can make a lot of sense too, for similar reasons.

I’ve found these are some of the most common ones.

1. Refinancing to get a lower rate

A lot of people refinance their personal loan simply to switch to a lower interest rate. If you still have a few years left on your personal loan, getting a lower interest rate could save you thousands of dollars in interest.

2. Refinance to save on fees

Some personal loans come with a monthly fee. And truth be told, you often don’t get a lot in return. Refinancing your personal loan to one without fees could mean a big saving.

3. Your credit score has improved

Let’s say you needed to take out a bad credit personal loan initially. But you’ve been making your repayments consistently for more than a year and your score is looking healthier now. You may now be eligible to apply with lenders that were previously off limits.

4. Refinancing to borrow more

If you want to borrow more money, you could apply to increase your loan amount. This may be more straightforward than applying for another loan.

5. Refinancing to a longer loan term

Personal loan statistics compiled by Money.com.au show the average new personal loan is just under three years. If reducing your regular repayment amount is a priority, a personal loan refinance to extend the term could be an option. Just bear in mind that doing that this could increase your total interest cost.

6. Refinancing to consolidate debt

Debt consolidation is a specific type of refinancing. It means you can combine other debts you have into a new loan, as well as your personal loan. You could consolidate credit cards, store cards, and buy now, pay later balances.

7. Better loan features

If your current personal isn’t flexible, you could refinance it to one that is.A big factor here is the ability to make extra repayments without penalty. Being able to do this can reduce your interest costs and mean you’ll be debt-free sooner.

Here are the steps I’d suggest looking at:

• Calculate the cost of your current personal loan. Look at the regular repayment amount and the total amount to repay (including interest and fees).
• Compare this to what’s on offer from refinance personal loans (always compare apples with apples when comparing, so the same type of loan, over the same term and for the same loan amount.)
• Now, calculate your switching costs, including break (early repayment) costs your current lender will charge and any upfront fees for the new loan
• Add the switching costs to the total cost of the new personal loan you’re considering and see if you’re still ahead.

Working out your switching costs is really the crucial step. Here’s what to look for:

Existing loan fees

Your current lender may charge break/early repayment fees if you end the loan agreement early. These should be outlined in the loan documents issued to you by your lender.

Fees for finding the new loan

Of course, it’s possible to compare loans for free. But if you use a personal loan broker who charges a fee, make sure to factor this in.

New loan fees

The lender you’re switching to may charge an application fee.

And be sure to take a look at what break fees the new lender may charge.

Just in case you choose to refinance again down the track.