When and How to Refinance a Personal Loan

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What does it mean to refinance a personal loan?
How to refinance a personal loan
- Check current personal loan rates. Personal loan rates don’t change often, and when they do they don’t change by much, but it’s a good idea to check whether current rates are lower or higher than usual. If average personal loan rates are higher than when you first borrowed, you may not save money by refinancing.
- Pre-qualify for a new personal loan. Pre-qualify with multiple lenders to see the rate and terms you can get on a new loan. Pre-qualifying doesn’t affect your credit score, and it lets you compare new loan offers against your existing loan.
- Consider refinancing costs. Compare the new loan’s annual percentage rate and estimated monthly payments to your existing loan to determine whether refinancing will lower your payments or save you money in the long term. Some lenders charge an origination fee, which often reduces the loan amount by up to 10%, so be sure the new loan will be large enough to pay off the old one.
- Submit a new loan application. Complete a formal application with the new lender and provide any necessary documents to verify your income and other details. The lender will run a hard credit check at this stage, which will cause your credit score to dip a few points.
- Use the new loan to pay off your existing loan. Some lenders transfer funds to your bank account, while others may directly pay off your first loan.
- Confirm the old loan is closed. Check your account to ensure there’s no balance on your first loan to avoid additional fees.
- Start making payments toward the new loan. Most lenders let you set up automatic, recurring payments from a checking account.
Lenders that can refinance a personal loan
Lender | Refinances loans | Est. APR |
---|---|---|
From Upgrade or another lender. | 7.99% - 35.99% . | |
Only from other lenders. | 6.49% - 25.29% . | |
Only from other lenders. | 8.99% - 35.49% . | |
Only from other lenders. | 7.99% - 24.99% . | |
From Wells Fargo or another lender. | 7.49% - 23.74% . | |
From Best Egg or another lender. | 6.99% - 35.99% . |
When refinancing is a good idea
Should you refinance? Calculate your new personal loan payment
When you should wait to refinance a personal loan
Does refinancing hurt your credit score?
Any time you apply for a personal loan, including to refinance, you may see a small, temporary dip in your credit score. As long as you make your full monthly payments on time, refinancing shouldn't have a long-term negative effect on your credit score.
Is it good to refinance a personal loan?
It’s best to refinance a personal loan if you can qualify for a lower rate — if your credit has improved or you’ve lowered your debt-to-income ratio, for example. Refinancing can also lower your monthly payment to make room in your budget, or it can increase your monthly payment so you can pay off the loan faster.
How soon can you refinance a personal loan?
While there may not be any restrictions keeping you from refinancing a personal loan shortly after getting one, giving yourself time to boost your credit score will give you a better chance of refinancing at a lower rate. Keep in mind that a lender’s hard credit check when you apply for a personal loan can cause your score to take a dip. Hard inquiries usually affect credit scores for about 12 months.
Article sources
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- 7. Federal Reserve. Military Lending Act. Accessed May 2, 2025.
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- 12. Solar Energy Industries Association. Solar Power Purchase Agreements. Accessed Mar 7, 2024.
- 13. SolarReviews.com. Homes with Solar Sell for 6.8% More [2024 Zillow Data Study]. Accessed Dec 10, 2024.
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