Written by 
- The Savvy Promise
At Savvy, our mission is to empower you to make informed financial choices. While we maintain stringent editorial standards, this article may include mentions of products offered by our partners. Here’s how we generate income.
Whether you have taken out a personal loan a couple of months ago or a year ago, circumstances change. You may find that your current personal loan is not sufficient to take care of your needs, which is why some people consider refinancing. Here are a few ways that need to be considered to see if refinancing is suitable for you.
1. You need more funds
There are times where you may find that your expenses increasing despite taking out a personal loan to handle them. Refinancing a personal loan can be one of the options you have to adequately take care of your expenses without going into the red. You could apply to have your personal amount increased instead of applying for a new loan altogether to save you time. However, carefully assess if an increase loan amount is what you need as this can affect your repayments.
2. Your current loan is not cutting it
It could be possible that you applied for the personal loan when you had bad credit. Bad credit loans tend to have restrictive features and fewer options. However, when you have improved your credit score you may want to switch over to a loan that is more suitable for you and comes with features that match your needs. This will be the perfect time to refinance or possibly compare lenders who will give you a loan that will off you the best value for your money.
3. Lowering your repayments
Your current loan repayments can have a huge effect on your budget. However, when you find that it is a tight squeeze every time to meet repayments then you could consider refinancing your personal loan. It could give you the chance of finding a personal loan that comes with a lower interest rate or flexible repayment terms that will be best suited for your finances.
4. You want to consolidate multiple debts
Having multiple loan payments and credit card debts that you have to pay off can be stressful, especially if each one has a different repayment date. You could consider refinancing to get a loan that can help you consolidate these multiple loans under one, which can also give you a single interest rate. This can help you effectively manage to pay off your loan.
5. You have calculated the financial implications
Refinancing may work for one person, but it may not work for the next. Therefore, it is vital that you carefully consider what it will do to your finances by using a personal loan calculator. Speaking to a financial advisor can also give you a clearer perspective on what will work for you. You may have to consider re-adjusting the way you spend money to make refinancing your loan work with your cash flow.
Did you find this page helpful?
This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.
The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.
Approval for personal loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.
The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.
