Yes, you can refinance a personal loan, perhaps to get a better interest rate or more affordable monthly payment. To refinance a personal loan, you’ll simply take out a new loan to pay off the old one — which means you’ll have both a new rate and repayment term.
Though it’s relatively straightforward to refinance a personal loan, it may not always be wise, particularly if your new loan has a higher interest rate or a longer repayment term. In both cases, increased interest charges would increase the overall cost of your repayment.
What is personal loan refinancing?
Personal loan refinancing is when you replace your loan with a new loan that has more favorable terms, such as a lower interest rate or lower monthly payment. You’ll apply for a loan, either with your current lender or a different one, and, once approved, pay off the existing loan with the funds from the new loan. By doing this, you’ll receive a new interest rate and new loan term.
Pros and cons of refinancing a personal loan
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Pros
Here are a few reasons why you might want to refinance a personal loan:
- Lower your interest rate: Depending on your credit, you might qualify for a lower interest rate through refinancing — which will help you save money on interest charges and potentially pay off the loan more quickly.
- Reduce your monthly payments: If you opt for a longer repayment term through refinancing, you could lower your monthly payments. Just keep in mind that choosing a longer repayment term means you’ll pay more in interest over time.
- Consolidate multiple types of debt: You can use a personal loan for almost any personal expense. For example, if you take out a personal loan for debt consolidation or credit card consolidation, you could also use it to consolidate your old personal loan.
Cons
Although there are potential benefits that come with refinancing your personal loan, there are also some important potential drawbacks to consider. Here are a few to keep in mind:
- Might pay more in interest: If you choose a longer repayment term, you could end up paying much more in interest over the life of the loan.
- Origination fees: Many personal loan lenders charge origination fees — sometimes as high as 8% or more, depending on the lender. These fees are deducted before the loan is disbursed to you, reducing the amount of money you actually get.
- Prepayment penalties: Some lenders charge prepayment penalties if you pay off the loan before the stated term. If the lender of your original loan charges this type of penalty, it could reduce your potential refinancing savings.
If you’re thinking about refinancing a personal loan, be sure to consider how much the new loan will cost you over time and if the possible savings are worth it. You can estimate how much you’ll pay for a new loan using our personal loan calculator.
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When should you refinance a personal loan?
While refinancing a personal loan might be a good choice in some cases, it isn’t right for everyone. Here are a few situations where personal loan refinancing could be a smart move:
- Your credit score has improved. If you have a better credit score than when you originally applied, you might qualify for a lower interest rate. This could help you save money on interest and possibly pay off the loan sooner.
- You need to lower your monthly payment. If you refinance and choose a longer repayment term, you could reduce your monthly payments and lessen the strain on your budget.
- You want to switch to a fixed interest rate: A variable interest rate can fluctuate with market trends, which means your rate might go up in the future. With refinancing, you can switch to a fixed interest rate, which will stay the same over the life of the loan.
And here are some scenarios where refinancing might not be a good idea:
- You don’t qualify for better terms. If you can’t qualify for a lower rate or more favorable terms, then refinancing likely isn’t worth it.
- Origination fees outweigh your savings. Depending on the lender, origination fees can be as high as 8% or more. If these fees will eat up the savings you get through refinancing, then it might not be a good idea.
- You are about to buy a house or finance another purchase. Taking out a new personal loan can have a slightly negative impact on your credit score, though it’s usually only temporary. However, if you’re planning to apply for a mortgage, auto loan, or another type of financing, then it’s likely better to wait to refinance a personal loan until later so there’s no effect on your credit score.
If you decide to get a personal loan for refinancing, remember to consider multiple lenders to find a loan that suits your needs.
How to refinance a personal loan
If you’re ready to refinance a personal loan, follow these seven steps:
1. Figure out how much you need to borrow.
The answer might seem simple enough if you’re just aiming to pay off an existing personal loan. But keep in mind that there may be an origination fee on your new loan, which would be subtracted from the loan proceeds. So figure fees into how much you need to borrow to complete the refinancing process. Also, estimate your new monthly payment (using our calculator above) to ensure it fits within your monthly budget.
2. Check your credit report and score.
To benefit from personal loan refinancing, you’d likely need a better credit score than you had when you secured your original personal loan. With a higher score (and lengthier credit history), you might qualify for a lower interest rate on the new personal loan. If your credit (or another financial marker) isn’t up to snuff, you might consider refinancing with the assistance of a personal loan cosigner who agrees to repay the new debt if you can’t. Requesting a credit score report from one of the three major credit bureaus is a great way to see if your score has improved.
3. Compare lenders and choose your loan option.
Be sure to compare as many personal loan lenders as possible to find the right loan for you. Consider interest rates, repayment terms, fees, and any restrictions the lender might have on refinancing personal loans. After comparing lenders — you can prequalify without commitment or a hard credit check with top-rated online lenders — pick the loan that works best for your needs.
Keep in mind
Some lenders have restrictions when it comes to refinancing personal loans. For example, LightStream doesn’t allow borrowers to refinance existing LightStream loans — however, you can use a LightStream loan to refinance a loan from another lender.
4. Complete the application.
Once you’ve chosen a lender, you’ll need to fill out a full application and submit any required documentation, such as tax returns or pay stubs.
5. Get your funds.
The time to fund a personal loan is typically about one week — though some lenders will fund loans as soon as the same or next business day after approval. Make sure to keep up with payments on your old loan while you wait for your funds.
6. Pay off your old loan.
Once you have your new loan funds, you can pay off your original loan. Contact your original lender to determine how to do this, then follow their instructions. Afterward, ask your original lender for documentation showing the loan has been paid off. You can also keep an eye on your credit report to make sure the loan shows as being paid — though keep in mind that it might take up to 30 to 45 days for the new status to show up on your credit report.
7. Begin making payments on your new loan.
Confirm your first payment due date and minimum payment amount with your (new) lender to ensure you get off to a good start. Unlike student loans, personal loans don’t feature a grace period, so you’ll be expected to begin paying down your new balance immediately. Consider enrolling in autopay to ensure you never miss a payment; some lenders might even offer an interest rate discount for doing so.
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Does personal loan refinancing affect your credit score?
When you apply for personal loan refinancing, the lender will perform a hard credit check to determine your creditworthiness, which might cause a slight dip in your credit score.
So does refinancing hurt your credit score? A little, but this impact is usually only temporary, and your score will likely bounce back within a few months. You can request a free credit report to keep an eye on your score.
Keeping up with payments on a new refinanced loan could actually help your credit score improve over time, which might outweigh the initially negative effect on your score.
Can you renegotiate your personal loan rather than refinance?
Renegotiating a personal loan may be possible under certain circ*mstances. Loan modification is typically done for people who are experiencing financial hardship and would otherwise default on their loan. You can request an extended repayment term, a lower interest rate, or lower monthly payments.
Not all lenders will consider renegotiating personal loans, and if you’re not experiencing financial hardship, it may be preferable to refinance instead.
Lenders that offer personal loan refinancing
Before you refinance your personal loan, it’s important to carefully consider your lender options to find the right loan for you.
Here are Credible’s partner lenders that offer personal loan refinancing:
4.24.2
Credible rating
Fixed (APR)
7.49% - 25.49%
Loan Amounts
$5000 to $100000
Min. Credit Score
700
Check Rates
on Credible’s website
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Overview
Lightstream is one of three Credible partner lenders to offer loan amounts up to $100,000, which makes it ideal for financing large expenses like home improvements or weddings. Funds are available as soon as the same day you apply, and you'll have up to 12 years to repay certain types of loans, including home improvement loans, RV loans, and boat loans. There are no origination fees, and rates are low — Lightstream's lowest APR beats SoFi's advertised lowest APR by 1 percentage point. But you'll need good credit to qualify.
Unlike most lenders, Lightstream does not let you prequalify on its site. Nor does it provide a contact phone number next to its customer service hours on its website.
Loan amount
$5,000 to $100,000
Repayment terms
2 - 12 years, depending on loan purpose
Fees
None
Discounts
Autopay
Eligibility
Available in all states except RI and VT
Min. income
Does not disclose
Customer service
Soft credit check
No
Time to get funds
As soon as the next business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Read full review
3.93.9
Credible rating
Fixed (APR)
7.80% - 35.99%
Loan Amounts
$1000 to $50000
Min. Credit Score
620
Check Rates
on Credible’s website
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Overview
Upstart has one of the lowest available APRs of Credible partner lenders and of all non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also is one of few lenders that doesn't have a minimum credit score requirement (if you apply on the lender's website), which makes it an option if you have bad credit or no credit history. Upstart may charge an origination fee as high as 12%, but good-credit borrowers may not be charged one at all.
Trustpilot gives Upstart 4.9 stars, which is the highest of all lenders we reviewed.
Loan amount
$1,000 to $50,000
Fees
Origination fee
Discounts
None
Eligibility
Available nationwide
Min. income
$12,000
Customer service
Phone, email
Soft credit check
Yes
Time to get funds
As soon as 1 to 3 business days
Loan uses
Pay off credit cards, consolidate debt, relocate, make a large purchase, and other purposes
Read full review
Fixed (APR)
-
Loan Amounts
$2500 to $40000
Min. Credit Score
660
Check Rates
on Credible’s website
View Details
Overview
Discover Personal Loans offers low APRs, repayment terms up to seven years, no origination fees, nationwide availability, and doesn't require your Social Security number to prequalify on its site. You'll need to have an annual income of at least $40,000, and a FICO score 660 or higher, to be eligible. If your credit score is fair or poor, you'll need to go elsewhere, as Discover doesn't allow cosigners.
Funds are available as soon as the next business day after loan approval.
Loan amount
$2,500 - $40,000
Repayment terms
3 - 7 years
Fees
Late fee
Discounts
None
Eligibility
Available in all 50 states
Min. income
$40,000
Customer service
Phone
Soft credit check
Yes
Time to get funds
Funds can be sent as soon as the next business day after acceptance
Loan uses
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding
Read full review
4.54.5
Credible rating
Fixed (APR)
8.49% - 35.99%
Loan Amounts
$1000 to $50000
Min. Credit Score
600
Check Rates
on Credible’s website
View Details
Overview
Upgrade has a suite of features that make it a very attractive lender: competitive interest rates, discounts for direct pay and autopay, as soon as same-day funding, up to seven-year repayment terms, and nationwide availability. Plus, loans are available to fair-credit borrowers, and you don't need to input your Social Security number to prequalify on the website. Upgrade even offers secured personal loans, which is not common among lenders.
However, Upgrade does charge an origination fee of 1.85% to 9.99%. You must have a FICO score of at least 600 and a minimum income of $25,000 annually to qualify.
Loan amount
$1,000 to $50,000 ($3,005 minimum in GA; $6,600 minimum in MA)
Repayment terms
2 to 7 years
Fees
Origination fee
Discounts
Autopay and direct pay
Eligibility
Available in all states
Min. income
Does not disclose
Customer service
Soft credit check
Yes
Time to get funds
1 business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
Read full review
44
Credible rating
Fixed (APR)
8.98% - 35.99%
Loan Amounts
$1000 to $40000
Min. Credit Score
660
Check Rates
on Credible’s website
View Details
Overview
LendingClub is a solid lender for good credit borrowers and some fair credit borrowers that apply directly on its website. It's easy to prequalify with LendingClub, especially if you're uncomfortable providing your Social Security number, as the company doesn't require it at the prequalification stage. (You will need to provide it if you move forward with a full application.)
While prequalification is not a guarantee that you'll be approved for a loan, LendingClub does a better job than most other Credible partner lenders at approving applicants that have successfully prequalified. In other words, you're less likely to have your application declined once you apply (if you've already prequalified). LendingClub may charge an origination fee between 3% and 8%.
Loan amount
$1,000 to $40,000
Fees
Origination fee
Discounts
None
Eligibility
Available in all 50 states
Customer service
Phone, email
Soft credit check
Yes
Time to get funds
Within 3 days
Loan uses
Debt consolidation, paying off credit cards
Read full review
4.94.9
Credible rating
Fixed (APR)
8.99% - 29.99%
Loan Amounts
$5000 to $100000
Min. Credit Score
Does not disclose
Check Rates
on Credible’s website
View Details
Overview
SoFi stands out for offering no-fee personal loans with competitive rates, high loan amounts, long loan terms, discounts for autopay and direct pay, and funding as soon as the same day. Plus, SoFi prioritizes convenience for existing and potential customers with features like live chat and an easy prequalification process that doesn't require your Social Security number. Once you have a loan with SoFi, you may be eligible for unemployment protection and unemployment assistance.
The main catch is that you need to qualify for a loan with SoFi, which can be hard to do if you don't have good credit. You also won't be able to apply with a cosigner, since SoFi doesn't accept cosigners; nor does it offer secured personal loans.
Loan Amount
$5,000 to $100,000
Repayment terms
2 - 7 years
Fees
Option to pay an origination fee (up to 6%) in exchange for a lower rate
Discounts
Autopay, direct pay
Eligibility
Available in all states
Min. income
Does not disclose
Customer service
Phone, email, live chat
Soft credit check
Yes
Time to get funds
Typically within a few days, given approval and bank account verification, but sometimes within the same day
Loan uses
Solely for personal, family, or household uses
Read full review
44
Credible rating
Fixed (APR)
8.99% - 35.99%
Loan Amounts
$2000 to $50000
Min. Credit Score
600
Check Rates
on Credible’s website
View Details
Overview
Best Egg is a solid lender for a wide range of borrowers and, notably, scored second for personal loan satisfaction in J.D. Power's Consumer Lending Study. It offers competitive rates, reasonable loan terms and amounts, and personal loans for fair credit. You'll need a FICO score of at least 600 to qualify, but the lower your score, the higher your APR may be. The APR includes the interest rate and origination fees, which range from 0.99% to 8.99% with Best Egg.
Note that if you successfully prequalify with Best Egg, you may be more likely to be approved for the loan relative to other lenders you prequalify with. Based on Credible data, borrowers who chose to apply for a loan with Best Egg were more than twice as likely to be approved (relative to most other Credible partners).
Loan amount
$2,000 to $50,000
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Discounts
None
Eligibility
Available in all states except DC, IA, VT, and WV
Min. income
None
Customer service
Phone, email
Soft credit check
Yes
Time to get funds
As soon as 1 to 3 business days after successful verification
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Read full review
3.93.9
Credible rating
Fixed (APR)
9.95% - 35.99%
Loan Amounts
$2000 to $35000
Min. Credit Score
550
Check Rates
on Credible’s website
View Details
Overview
Avant personal loans are a good choice for borrowers with bad credit looking for small- to moderate-sized personal loans. Loans are available up to $35,000 and you could get the money as soon as the next business day after approval. Plus, Avant is more likely than some lenders to approve the applications of borrowers who've prequalified with Avant. However, the lender charges an origination fee up to 4.75%, and its top-range interest rates are among the highest of the lenders we reviewed.
Loan amount
$2,000 to $35,000**
Fees
Origination fee, late fee, dishonored payment fee
Discounts
None
Eligibility
Available in all states except HI, IA, MA, ME, NY, VT, and WV
Min. income
$1,200 monthly
Customer service
Phone, email
Soft credit check
Yes
Time to get funds
As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
Loan uses
Debt consolidation, emergency expense, life event, home improvement, and other purposes
Repayment terms
1 to 5 years (2 to 5 years through Credible)
Read full review
4.34.3
Credible rating
Fixed (APR)
11.69% - 35.99%
Loan Amounts
$1000 to $50000
Min. Credit Score
560
Check Rates
on Credible’s website
View Details
Overview
Universal Credit is one of a handful of lenders that offers personal loans for bad credit. If your FICO credit score is at least 560, you may be eligible for a Universal Credit personal loan. It offers loan amounts up to $50,000, repayment terms up to seven years, and discounts for direct pay and autopay. Funds are available as soon as the next business day after loan approval.
Note that rates and fees can be relatively high — you may pay an origination fee from 5.25% to 9.99%, and APRs start at 11.69%. If you get a loan with a high interest rate, consider refinancing your personal loan at a lower rate once you've improved your credit score.
Loan amount
$1,000 - $50,000
Repayment terms
3, 5, or 7 years
Fees
Origination fee
Discounts
Autopay and direct pay
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Min. income
None
Customer service
Phone, email
Soft credit check
Yes
Time to get funds
As soon as 1 business day after acceptance
Loan uses
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
Read full review
3.93.9
Credible rating
Fixed (APR)
18.00% - 35.99%
Loan Amounts
$1500 to $20000
Min. Credit Score
540
Check Rates
on Credible’s website
View Details
Overview
OneMain Financial has multiple options for bad-credit personal loans. There is no minimum credit score required (if you apply directly with OneMain), which means you could get a loan with bad credit (FICO below 580). Plus, cosigners are allowed — a cosigner is someone (ideally, with good credit) who promises to repay the loan if you can't, which can make it easier to qualify or lower your rate. And, secured personal loans are available. You secure a loan with collateral, which may also help you qualify or lower your rate.
Rates are higher than competitors and OneMain charges origination fees as either a flat fee up to $500, or a percentage from 1% to 10% (depending on your state of residence). Note that even if you prequalify for a personal loan with OneMain, getting approved isn't a given.
Loan amount
$1,500 to $20,000
Fees
Origination fee, unsuccessful payment fee, late fee
Discounts
None
Eligibility
Must have photo I.D. issued by U.S. federal, state or local government
Min. income
Does not disclose
Customer service
Phone, email
Soft credit check
Yes
Time to get funds
As soon as 1 to 2 days after acceptance
Loan use
All except business, and education
Read full review
All APRs reflect autopay and loyalty discounts where available | LightStream disclosure | SoFi Disclosures | Read more about Rates and Terms
Meet the expert:
Emily Guy Birken
Emily Guy Birken is a Credible authority on student loans and personal finance. Her work has been featured by Forbes, Kiplinger's, Huffington Post, MSN Money, and The Washington Post online.
