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When To Refinance...

What is refinancing and why should you bother considering it?

 

If you've ever received poor terms on a loan (meaning high interest rate and payments) especially a major loan such as a car or home loan; or if the loan interest rates available have simply gone down and your creidt has improved since you got your loan, you may want to consider refinancing.


Have A Refinance Meeting

Refinancing means that you take your loan to another lender in order to enjoy better terms or rates. You don’t want to do this too often as it prevents you from developing long-term relationships with lenders and results in inquiries on your report, but if you have good reasons to refinance, it can actually help you repay your debts.


For example, if you can get more reasonable monthly bills that you will actually be able to repay, refinancing can help prevent all those non-payment credit dings that come from not being able to pay your bills. Making your payments more affordable can save you money and can save your score. In the short term however, refinancing can push your score down, as you will acquire inquiries on your report as you look for a new lender and as you close old accounts and open new accounts.


In short, refinancing can be a good way of boosting your score since you are saving the money on payments in the long term. If you are now missing or delaying payments because you cannot afford monthly bills, for example, refinancing a loan or two can be a good way to get back on track and can get you repairing your score again. If you are getting to a place where you have too many loans or want to consolidate them, you may want to consider loan consolidation, which we cover in another post here.

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