High-interest loans can be a financial burden that weighs heavily on your budget – and your mind. In today’s economy, many people are struggling with this, and it can make it difficult to make ends meet. Refinancing, however, can help you lower your monthly payments and get back on track financially.
If you are struggling to make payments or simply want to save money, refinancing with debt consolidation loans can be a smart move. In this article, we’ll discuss the benefits of lower-interest personal loans or credit cards and how you can get started.
What Is Loan Refinancing?
Refinancing is the process of taking out a new loan to pay off an existing loan. The new loan typically has better terms, such as a lower interest rate or longer repayment period, which can make managing your debt a whole lot easier.
Is Refinancing High-Interest Loans a Good Idea?
Refinancing high-interest loans can provide several benefits:
- Lower interest rates: High-interest loans, such as credit cards or payday loans, can have APRs that exceed 20%. Refinancing with a personal loan or credit card with a lower interest rate can save you hundreds or even thousands of dollars in interest charges over the life of the loan.
Even refinancing an old auto loan can have interest-saving, money-saving benefits. See our article all about refinancing auto loans for more info.
- Lower monthly payments: A lower interest rate can also result in lower monthly payments, saving you hundreds, even thousands, of dollars in the long run. This can help you better manage your cash flow and free up money for other regular budget expenses.
- Simplified repayment: Refinancing multiple loans into one can simplify your life. Instead of juggling multiple payments with multiple due dates, you’ll only have to worry about one.
- Improved credit score: Refinancing high-interest loans can also improve your credit score. Paying off high-interest loans reduces your credit utilization rate, which is the amount of credit you’re using compared to the amount you have available. This will make it easier to qualify for future loans.
- Reduce stress and anxiety: Finally, refinancing high-interest debt can reduce your stress and anxiety. High levels of debt can affect your physical and mental health. By refinancing to a lower interest rate and consolidating debt, you’ll relieve some of the burden on your budget, reduce your stress levels, and have more peace of mind.
How Can You Refinance Loans and Pay Off Debt Faster?
Refinancing high-interest loans with a personal loan or a credit card is a relatively simple process. Here are the steps you can take:
- Check your credit score: Lenders look at your credit score and credit history when determining whether to approve your loan application. Before applying for a loan, check your credit score and dispute any errors you find.
- Check out your loan refinancing options with Discovery FCU: We offer several great choices for saying goodbye to high-interest loans and lowering payments:
- Personal Debt Consolidation Loans: Current rates are as lows as 9.24% APR* with a maximum loan amount = $40,000.
- Visa® Platinum and Classic credit cards: Current non-variable rates are 8.99% APR* and 12.99% APR*, respectively.
- Auto Loan Refinancing: We offer loan rates as low as 4.24% APR* (same-day financing available).
- Apply for a loan from Discovery FCU: We make it easy to fill out an application online, or if you want, you can book an appointment with us.
- Pay off your existing loans: Once you’re approved for a loan, use the funds to pay off your existing high-interest loans. This will close out those accounts and simplify your repayment process.
- Make regular payments on your new loan: Make timely payments on your new, low-interest loan to build your credit score and avoid late fees and penalties.
For more information on how we can help improve your finances, speak to a Discovery FCU representative today!
*APR = Annual Percentage Rate. View Account Details Here.