Refinance Personal Loan

Refinancing a personal loan can be a great way to pay a lower total amount of interest and fewer fees or change your loan term. Before you refinance your loan, it’s important to understand the process and the costs involved.

Refinancing a personal loan is a process where you take out a new loan to pay off an old loan, usually with a different lender.

Generally, this is done to secure a better deal on the loan amount or consolidate debts into one simple loan. It's also an option to get better rates if you've previously agreed to a low-doc personal loan.

Whether you’re looking for the lowest rate, the lowest repayments, or just a personal loan without unnecessary fees, taking a few minutes to compare your available options can save you time and potentially hundreds or thousands of dollars over the lifetime of your loan. You can do that simply by using our smart-form.

If you want to refinance a personal loan, the process is fairly straightforward. The most important aspect will be in taking your time to truly understand the costs of your existing debts, and an accurate comparison of any new loan and how you will benefit.

Here’s how to refinance your personal loan in 3 simple steps:

1. Compare personal loans

You should regularly review personal loan offers on the market, at least every six months. If a personal loan comes up that could save you time and/or money, you’ll spot it and be able to refinance. Focus on interest rates, fees and loan flexibility when comparing your loan to others.

The four types of fees you should be aware of when comparing lenders for a personal loan include:

• Upfront costs - establishment fees and application fees

• Ongoing fees - annual fees and monthly fees

• Late payment fees - charged if you miss a payment

• Extra repayment fees - charged if you make early repayments to reduce the amount of interest payable on the principal amount.

If you are using the Money.com.au smart-form to compare personalised loan offers and rates, the fees for each loan will be listed alongside the comparison rate on the results screen.

If you do not find any available offers to compare, you can work with a personal finance broker to assist in finding you a suitable deal and completing your application.

Brokers operate all across Australia — whether you need to refinance your personal loan in Sydney, Melbourne, Brisbane, Perth, Adelaide, Newcastle, or Canberra, you'll be able to find one who can help you assess a range of suitable options specific to your financial circumstances.

2. Cost-benefit analysis

If you find a loan you think might be more suited to you, work out what refinancing your personal loan may cost you and compare it to what it will save you. Make sure you know whether your existing loan and new loan have any of the following fees that may add to the cost of refinancing:

• Break fees
  

• Early exit fees
  

• Discharge fees
  

• Application fees
  

• Loan establishment fees
  

3. Apply for the new personal loan

If you use our smart form and find a lender you want to apply with, you will be directed to the lender’s website and need to supply all documentation as you normally would when applying for a new persona loan, which may include:

• Proof of identity — e.g. passport or driver licence
  

• Proof of income — e.g. payslips, bank statements
  

• Details of any current debts or other loans
  

You will need to provide personal identification and financial documents (usually your bank statements or recent payslips), as lenders will need to assess your financial stability and determine if you can service the loan amount.

You should always have a clear goal and a reason in mind before refinancing a personal loan. Here are some of the most common reasons for refinancing:

• Lower rates — If you’ve had your personal loan for a while, chances are market rates have changed. If this is the case, you could secure a loan with low interest rates by refinancing.
  

• Lower fees — It’s a good idea to regularly compare your personal loan fees to those of other comparable loans. If you find your fees are higher than others, refinancing could save you money.
  

• Longer loan term — If you’d like a longer loan term and smaller monthly repayments, refinancing your personal loan could be a way to achieve this. But be careful — the longer your loan term, the more interest you’ll pay in total.
  

• Higher credit limit — The easiest way to access more credit is usually to request it from your current lender. But if that doesn’t work, refinancing your personal loan may allow you to access a higher credit limit.
  

• Better loan features — One reason to refinance your personal loan could be to secure a new loan with better features, such as lower fees or flexible repayments. The features must be suitable for your specific situation, such as saving you money and or making it easier to meet repayments.
  

• Debt consolidation — If you have existing debt tied up in many different loans, refinancing to consolidate those debts could help you save money and simplify your repayments. Learn more about your options when refinancing to consolidate personal loan debt.
  

Refinancing a personal loan is the process of taking out a new loan to repay your existing personal loan. It can be a great way to switch to a new loan to save money, access new loan features, or consolidate debt.

However, refinancing isn’t right for everyone.

Before you refinance your personal loan you should always compare the total cost of any loan you choose to your current loan to make sure the switch saves you money and makes your life easier.

Once you’re approved and the funds are paid out, you’ll usually have to repay your other loans yourself, but in some cases, your new lender will settle the loans directly with your old lender.