It is a known fact that it is possible to refinance a mortgage; however, many have no idea that it is actually possible to refinance other types of loans – such as automobile loans, credit cards, personal loans, and even student loans.
Refinancing is a simple process that occurs numerous benefits. Simply put, the process is nothing more than obtaining a new loan over an existing loan in order to reap the rewards of better terms – such as a lower interest rate.
If you have an outstanding loan, refinancing may be right for you. In order to make that determination, consider the following:
- You must first determine what your credit score is, and if it is high enough for refinancing. You may obtain your credit score by ordering your free, yearly credit report by calling 1-877-322-8228. Once you obtain the report, view it to determine if all of the information is correct. If there are inaccuracies, report them. By reporting them, you have the opportunity to have the inaccuracies removed. If removed, this will improve your credit score. If you find your score to be low and there is no way to make it higher, simply avoid trying to get refinanced.
- What are the introductory offers? What happens after the introductory offer – such as 0% interest – ends? If you refinance, will you be better off with your current rates or the rates of the new offer, once all introductory offers expire?
- Is there a prepayment penalty associated with your current loan? If so, you may get charged extra if you refinance and start fresh.
- Will you pay less each month, but more in the long-run? For example, will refinancing give you a lower monthly payment and have you paying on the loan for longer than you would have on the original loan? If so, refinancing is probably not a good option for you.
- What are your financial goals? Do you have multiple bills that you want to consolidate into one? Do you want to pay off high interest items first? Do you want to make a large purchase? Do you want to pay off a purchase you made that includes a large monthly fee? Your goals should be carefully considered prior to committing to refinancing.