We never know when an emergency may arise, which invariably places a great deal of strain on our cash flow. And due to the urgent need for funds, people are likely to borrow in haste and not make a calculated decision on the overall cost of borrowing and its impact on their budget. So it is important to search for ways to reduce the interest payable, and thereby reduce your EMIs.
There are mainly two approaches to reduce your personal loan EMIs including loan refinance or a transfer of personal loan balance. Let us take a closer at loan refinancing.
Meaning of personal loan refinancing
The process of getting a new personal loan to pay off one or more existing loans is referred to as refinancing a personal loan. Typically, borrowers refinance to receive or reduce their monthly payments in some other way.
Refinancing can also be used to get a longer-term loan with lower monthly payments for debtors who are having difficulty paying back their loans. In these instances, the total amount paid will increase as interest must be paid over a longer period.
You can use the personal loan EMI calculator to get an estimate of your personal loan instalments.
Benefits of personal loan refinancing
Refinancing your personal loan can provide several benefits, including:
- It could be possible to reduce your monthly payments to one that is more manageable.
- The terms of your personal loan could be modified if you refinance it. You can set a shorter loan tenure and save money on the total interest paid.
Best time to refinance a personal loan
- Your lender is offering an attractive interest rate: It is a good idea to refinance your personal loan if you believe that the interest rate charged by your current lender is excessive and another lender is offering an attractive personal loan interest rate. A reduced interest rate would result in lesser monthly payments.
- Your CIBIL Score has increased: If your CIBIL Score has increased, creditors may offer you better offers on interest rates, processing fees, etc. In such situations, you can refinance your personal loan to get more favourable terms.
- Your monthly income has increased: If your monthly income has increased significantly, you may wish to pay off your loan obligations immediately. In such situations, you can choose to shorten the loan term by refinancing the loan.
- You want to lengthen the loan's repayment period: You can finance your when you want to lengthen the period of repayment so that your monthly EMI is decreased.
- Add or remove a co-applicant from the loan: If you want to add or remove a co-applicant from your loan account, you can refinance your personal loan. You can add or remove a co-applicant when you refinance your loan because you will have a fresh set of terms and conditions.
Refinancing a personal loan can be a lifesaver when you have too much debt. You may streamline your finances and make it simpler to budget if you refinance your personal loan and combine your present bills into a single, reasonable monthly payment. You might be able to borrow more money than the total of your current loans if you have a strong credit score. In other words, you can get a loan top-up.
Get a Bajaj Finance Personal Loan of up to Rs. 40 lakh to manage all your expenses in a stress-free manner.
