Refinancing a personal loan implies paying off an existing loan with a new one that offers better interest rates or lower monthly payments. It is usually done when borrowers feel that they cannot bear the burden of their high equated monthly instalments (EMIs), the interest rate on their existing loan is too high or simply because another lender is offering lower interest rates.
Personal loan refinance helps you save money with lower interest rates, lower fees, and better loan terms. You can also refinance your personal loan to shorten the loan tenure so that you can save up on the interest in the long run. When you opt to refinance your personal loan, the new lender will take over the loan from your current lender and hence, all the future EMIs will have to be paid to the new lender.
|Name of the Bank||Interest Rate (p.a.)||Benefits Offered|
|HDFC Bank||11.39% onwards||
|Kotak Mahindra Bank||-||
There are different types of refinancing in India for both personal loans as well as mortgages. Let us take a look at some of the key types of refinancing:
Yes, if your current bank from whom you availed the loan does not offer the option to refinance, you can approach another bank to get your personal loan refinanced.
Refinancing your personal loan might be an option to consider if the current interest rates have dropped below the interest rates levied on your loan, or if you are looking to extend your repayment tenure.
You can get your personal loan refinanced anytime you see that your interest rate can drop down anything between 0.5% and 2% or even more. Hence, get your personal loan refinanced only if you realise that the interest rate charged will be lower than what the lender is charging you currently.
Your credit score will drop a bit if you choose to refinance your personal loan. However, in the long run your credit score will rise if you repay all your loans on time.
You can contact your bank and ask them to consider reducing your interest rate provided you have a good relationship with them. If you have been an existing customer of the bank for a long time, then there is a possibility they may consider lowering your interest rate. If you maintain a good credit score, then the possibility of the bank lowering your interest rate increases.
It is not always a very good idea to get your personal loan refinanced every time. However, if the bank has no problem and you can repay the loan amount on time, then you can get your personal loan refinanced as many times as you want.
Yes, if the bank feels that you will not be able to repay the personal loan amount on time, or if your credit score is extremely low, then they are well within their rights to reject your application for a personal loan refinance.
Yes, you can get a personal loan refinance to repay your home loan.
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