Avail Instant Personal Loans ✓ Loan up to 50 Lakhs ✓ Quick Disbursal ✓ Minimum Documentation! Apply Now

Meaning of Personal Loan Refinancing

Personal loan refinancing means replacing your existing loan with a new one that offers better terms. You take a fresh loan to pay off the current one, usually to get a lower interest rate, reduced EMI, or better repayment terms.

Many borrowers opt for personal loan refinancing when:

  • EMIs become difficult to manage due to high monthly payments

  • Interest rates have dropped, allowing them to save on loan costs

  • Another lender offers better terms, such as a lower interest rate or a longer repayment period

Some of the Top Lenders Offering Personal Loan Refinance

There are several banks and NBFCs providing personal loan refinancing options in India. Here are some of the top lenders who offer to refinance your personal loans: 

Lender

Interest Rate Range (p.a.)

Key Benefits

HDFC Bank

10.85% – 21%

  • Quick processing

  • Flexible tenure

  • Minimal documentation

ICICI Bank

10.85% - 16.65%

  • Online application process

  • Flexible repayment options

Bajaj Finserv

10% – 31%

  • Fast approval

  • Minimal paperwork

  • Customer-friendly procedures

Tata Capital

11.99% – 29.99%

  • Tailored loan solutions

  • Flexible terms

  • Prompt disbursal

Indiabulls

Starting at 13.99%

  • Competitive rates

  • Easy eligibility criteria

  • Swift processing

Disclaimer - The details mentioned are subject to change at the lender’s discretion.

When Should You Refinance Your Personal Loan

Refinancing your personal loan can be a smart choice in certain situations. Here are some reasons why you might consider it:

  • A lender is offering a lower interest rate

If another lender offers a better deal on interest rates, refinancing can help you reduce your EMI and overall loan cost

  • Your income has increased

If your earnings have grown significantly, you might want to repay the loan faster. Refinancing allows you to choose a shorter tenure, helping you clear your debt sooner.

  • Your credit score has improved

A higher credit score can make you eligible for better loan terms, such as lower interest rates and reduced processing fees. Refinancing at this stage can help you secure a better deal.

  • You want to extend your repayment tenure

If your EMIs are too high, refinancing can allow you to extend the loan tenure, making monthly payments more manageable

  • You need to add or remove a co-applicant

If you wish to add or remove a co-borrower, refinancing creates a new loan agreement, allowing you to update the loan structure as needed

Types of Refinancing

Here are some key types of refinancing options available to you:

Rate-and-term refinancing

Adjusts your interest rate, loan term, or both without changing the loan amount. For example, switching from 12% interest for 5 years to 10% for 3 years can lower costs.

Cash-out refinancing

Lets you borrow more than your current loan balance and take the extra amount in cash. If you owe ₹1 Lakh but qualify for ₹1.5 Lakhs, you get ₹50,000 for other expenses.

Cash-in refinancing

Allows you to make a lump sum payment to lower your loan balance. If you owe ₹2 Lakhs and pay ₹50,000 upfront, your new loan will be for ₹1.5 Lakhs, reducing EMIs.

Streamline refinancing

A hassle-free process with minimal paperwork and no credit check. Best for borrowers with a good repayment history.

Steps to Refinance a Personal Loan

Refinancing your personal loan involves a few key steps to ensure you get better terms and save on interest. 

Here’s what you need to do:

1. Assess Your Needs

Calculate how much you need to borrow. Avoid taking extra, as a higher loan means more repayment

2. Talk to Your Current Lender

Check if they can offer better terms or waive prepayment penalties before switching

3. Compare Lenders

Look for better interest rates, tenure, and benefits. Read reviews and contact lenders to assess service quality

4. Check Your Credit Score

A higher score improves approval chances and helps secure better loan terms

5. Apply for Refinancing

Submit your application online or visit the lender’s branch for assistance

Pros and Cons of Refinancing Personal Loan

Refinancing your personal loans come with both pros and cons. You can get the option to consolidate multiple loans and get off burden, but at the same time, you also have to pay certain charges for processing. 

Here are some of the pros and cons listed:

Pros

  • You can move from a floating to a fixed interest rate or consolidate multiple loans into one for easier management

  • Since you have already repaid part of your loan, refinancing a lower balance reduces your monthly payments

  • You can extend your loan term for lower EMIs or shorten it to clear your debt faster

  • Refinancing helps you secure a lower interest rate, reducing your overall repayment amount

Cons

  • Lenders assess your income and credit history before approving refinancing. A drop in income or a low credit score may lead to rejection

  • Closing your original loan and setting up a new one involves charges like processing fees, credit report fees, and more. Always calculate these costs before deciding.

Things to Remember While Refinancing Your Personal Loan

Here are some things you can consider when refinancing your personal loan:

  • Consider foreclosure fees, processing fees, and other costs. Refinance only if savings outweigh expenses

  • A score below 600 may lead to rejection or higher interest rates, defeating the purpose of refinancing

  • It is beneficial in the early repayment years. For a 5-year loan, refinancing makes sense if done within the first 3 years

  • Be prepared with identity proof, bank statements, and income documents for a smooth process

  • Review all terms before signing. Seek clarification from the lender if needed

DISCLAIMER

The information and suggestions provided by BFDL hereinabove is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial advice or endorsement of any sort.

The information including interest rates or fees, loan amount and other charges with regard to any product, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks or NBFCs. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any application or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products.

Read More

Frequently Asked Questions

How many times can I get my personal loan refinanced?

There is no set limit to how often you can refinance a personal loan, as long as each refinance is financially justifiable and improves your loan terms

Can I refinance my personal loan from another bank?

Yes, you can refinance your personal loan from another bank if your current lender does not offer refinancing options.

Can a bank reject my application for personal loan refinance?

Yes, a bank can reject your application for a personal loan refinance if they believe you may not repay on time or if your credit score is low

Can personal loans be refinanced?

Yes, personal loans can be refinanced by taking out a new loan to pay off the existing one.

Is it good to get your personal loan refinanced?

Refinancing is beneficial if it results in lower interest rates or more favorable terms without extending the repayment period unnecessarily.

Is it good to get your personal loan refinanced after 1 year?

It depends on whether you have secured better terms; generally, consider refinancing after improving credit scores or finding lower interest rates.

Does your credit score drop if you refinance your personal loan?

Your credit score might temporarily decrease due to inquiries during the application process but should improve over time with timely payments.

Home
active_tab
Loan Offer
active_tab
CIBIL Score
active_tab
Download App
active_tab