When you decide to apply for a personal loan online, you are taking the right step towards financial freedom. There is no doubt that a personal loan is the most flexible and quickest financing option in case you require money urgently. But, sometimes, refinancing your personal loan can be wiser than continuing with the same loan.
Read this blog to discover the top-4 reasons why you should consider refinancing your personal loan.
What is Personal Loan Refinancing?
Quite often, borrowers use a personal loan calculator to check the eligibility, interest rates, and EMI and apply for a loan. Sometime later, they realise that the actual interest cost is much higher than what they initially thought or the calculator displayed.
Personal loan EMIs depends on many factors like the borrower’s repayment capability, credit utilization ratio, debt to income ratio, etc. While the personal loan calculator displays an approximate figure, the actual EMI may change when the lender evaluates the merit of your application. Moreover, some lenders have higher associated costs than others, and this can enhance the EMI cost.
Refinancing a personal loan allows you to reap benefits of a lower interest rate and lower EMIs, while you continue to enjoy the same loan amount that you had received.
The Top-4 Reasons Why Refinancing Can Be an Excellent Option
1. An Improvement in Credit Score
There are times when, despite doing everything you can, the credit score just does not increase. Then there are times when the credit score jumps beyond your expectations. The increase or decrease in credit score depends on factors like outstanding loan amount, payment frequency, credit utilisation, and the likes.
Whatever the reason for the increase, an increase in credit score can suddenly make you more attractive to lenders. They would not mind offering you a lower than average rate of interest and other perks that were so far inaccessible for you. In such cases, it is better to lap up the opportunity and avail the personal loan refinancing option. At any time, you may check a personal loan calculator to get an idea.
2. An Irresistible Offer
Sometimes, you may need money immediately to tide over a crisis. And, in an extreme hurry, you might overlook the fine print or apply for a high-interest personal loan online. After getting time to introspect, you realize that had you paid more attention to the lender’s terms and compared it with a few more lenders; you might have saved a handsome amount.
If this strikes a chord, then worry no more. Use a personal loan calculatorto see how much you can save due to a lower interest rate, and apply for refinancing your personal loan.
3. Make Your Loan Account Co-Borrower Free
At times, you might need to apply for a personal loan online with a co-borrower. Having a co-borrower can be especially helpful if your credit score or repayment capability is below the minimum criteria set by the lender.
However, you can also delete the co-applicant if your income situation or credit score improves. Personal loan refinancing is the best way to delete the name of the co-applicant and claim additional benefits as the sole borrower.
4. Reduce Your Monthly Liabilities
Sometimes, paying EMIs can be a burden, and you would desperately look for alternative ways to reduce the liabilities. Personal loan refinancing can be an excellent way to reduce liabilities. You may also apply for a loan term extension, allowing you more time to repay the principal and interest.
However, remember that the extension of the loan term would also increase your EMIs proportionately. You may use a personal loan calculator to calculate your total savings through the personal loan refinancing.
Applying for a personal loan online is easy; repaying the EMIs is not. In case you have been looking at alternative ways to reduce your outstanding liabilities, refinancing your personal loan can be the best option for you.