The Ins and Outs of Refinancing Process
By Anupama Deshpande | October 10, 2019

You may find several occasions when you have availed a loan and after few months, the rate of interest on loan is dropped. You may think that it had been good if you would have opted for loan after few months. Do not worry, if you come across such type of situation, you can get your loan refinanced at reduced rate of interest with anpther lennder.

Refinancing a loan is repaying an existing loan fully with the funds received from the new lender at comparatively lower interest rates and better terms. One goes for refinance for following reasons most of the times:

• When refinancing results into good savings
• If you get better loan terms
• You want to consolidate several business loans into a single loan

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Now let's come to the ins and outs of refinancing process. The whole step-wise Refinancing Process has been described below:

All the information is available online now-a-days which helps you do market reseach for the lenders who are offering refinance facility on attractive rates. You can take the help of any professional or loan aggregator.

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You must calculate total savings after refinancing & then you should calculate total cost of refinancing considering the new interest rate, loan processing cost, pre-closure penalty by existing lender, other terms of loan, etc.

Before applying for refinance, you should not forget to check your credit score and make sure that it has improved from your previous score so that you can get better offers like lower interest, longer tenure, lesser processing charges, mor top-ups, etc.

The market reserach that you have already made will give you the favourable options of lenders for refinancing. Out of those, select top 3 lenders and obtain quotes of refinancing your loan from all of them.

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After receiving the quotes and other related details like processing fee, pre-payment charges, other charges, tenure, turn around time, etc., you need to compare all these 3 offers.

After comparing the offers on various significant points, you select the best lender for refinancing your existing loan. You can visit them personal and get all your queries clarified so that there is no confusion. Also get all the details in writing from them before applying for refinance.

You should avoid applying refinancing from multiple lenders as it ay hurt your credit score because the inquiries which the lenders make from credit bureaus affect your score slightly negatively.

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Without confirming that your loan is refinanced, you should not stop paying EMIs of your existing loan and only after ensuring that the existing loan has been paid off, you can safely stop paying EMIs of existing loan.

An another benefit of refinancing your loan is that you also have an option of taking top-up loan at the prevailing rates along with loan refinance such as home loan refinance.

Lastly, it is advised that you should try to switch the loan early phase in your loan tenure and should not to make the switch after 6 or 7 years of loan payment as you would have already paid most part of the interest amount during the initial period of your loan tenure.