Should You Go for Personal Loan Refinancing?
A personal loan is a good financial tool during the times of financial crisis. Most of the banks today offer loans with minimum documentation and easy approval. Everything regarding the personal loans seems to be attractive but, you are obliged to pay high-interest rates for availing these wonderful benefits through personal loans. Our patronage to these unsecured personal loans will turn negative when you cannot afford to repay high EMIs of the loan comfortably. What should you do when you cannot repay your unsecured personal loan EMIs? Don’t let late payments impact your credit score. If you are struggling to pay your EMIs on a personal loan, consider refinancing personal loan.
With the effects of demonetization, many banks are lowering their interest rate, considering refinancing your unsecured loan will help you save big interests and afford unsecured loan EMIs comfortably. Now, you understood that it is a right time to refinance your loan, look into the benefits you get before you proceed ahead.
- You will have two options when you go for refinancing unsecured loan. You can negotiate interest rate with the new lender and save a good deal on your EMIs.
- The second option is to change your loan terms. You should go by this option when your credit score is not good and you don’t want to trouble your expenses to afford EMIs every month. By choosing this option, you will get an option to lower monthly EMIs but, will be paying more interest in the long loan tenure.
Checkpoints for personal loan refinancing
Are you eligible?
It sounds good when you hear that you can reduce the interest rate on the personal loan by considering loan refinancing. As the goal of refinancing is to reduce the interest rate on the loan, a person with poor credit score will not be able to gain the benefit. When the credit score is poor, there will be a slight change in the interest rate offered by the lender and the benefit you gain is not much.
Whether it is a personal loan or any big loan, shopping for the best lender will help you get the best deal. Compare your current personal loan with the loan that just caught your attention. Apart from the interest rates on the loans, you must consider other factors like processing fee, loan tenure into consideration. Remember, that you are going to pay penalty to the lender for prepayment of the current loan. The benefits you get from refinancing the loan should outweigh the expenses that you incur in closing the previous loan.
Ask before switch
Nothing is served until you ask. When you approach the new lender with the appeal for quick loans refinancing, stay prepared to negotiate the terms with the new lender to enjoy better benefits. You can also negotiate a striking deal with your lender to either negotiate the interest rate or lower EMIs before considering refinancing.
Consider moving ahead with refinancing unsecured loan only when you fail to negotiate the terms with the current lender.
GO AHEAD WITH PERSONAL LOAN