When and How to Refinance a Personal Loan

LightStream: Best for excellent credit borrowers

PenFed Credit Union: Best for small loan amounts

Discover: Best for repayment assistance options

Upgrade: Best for bad credit borrowers

SoFi: Best for same-day funding

Best Egg: Best for debt consolidation

BHG Money: Best for large loan amounts

Not all lenders allow you to use their funds to refinance an existing loan. However, once you’ve compiled a shortlist of candidates, it’s a good idea to compare loan offers. Taking this step can save you money in the long run.

Here’s how to do it:

APRs: The APR on a personal loan measures the total cost of the loan, including the interest rate and any fees. Pay close attention to this metric because it can make a big difference in the amount you pay over the life of the loan.

Added fees: Some lenders charge added fees, such as origination fees or prepayment penalties. Be sure to ask each lender to provide you with a fee schedule, so you’ll know what to expect in terms of additional charges.

Loan terms: The loan term refers to the total amount of time you have to repay your loan. Long-term personal loans typically come with lower monthly payments, but you’ll likely pay more in interest charges overall. Short-term loans will allow you to save on interest, but your monthly payment will be higher.

Funding time: Every lender has its own funding time. Some lenders have the capacity to offer same-day funding while others will take a few days to complete your request. Make sure the lender’s timeline works in your schedule before you sign on the dotted line.

Lender perks: Occasionally, lenders will offer perks, like interest rate discounts or direct payments. Consider these factors as you’re weighing your options.

Here are three signs it could be a good idea to refinance your loan:

• Your credit score has improved: If your credit score has improved substantially since you last applied for your loan, you may be able to secure a lower interest rate by refinancing. A lower interest rate can save you money over the life of the loan.
• You need lower payments: When you need to lower your monthly payments, think about refinancing into a longer-term loan. While doing so will lower your payment amount, know that it will also increase the total amount of interest charges you’ll pay over time.
• You want to pay off the loan faster: If you want to pay off your loan faster, consider refinancing into a shorter loan term. Just be aware that your monthly payment will go up if you decide to go this route.

We reviewed more than 29 lenders to determine the overall best seven personal loans for refinancing. To make our list, lenders must offer joint loans with competitive APRs. From there, we prioritize lenders based on the following factors:

• Accessibility: Lenders are ranked higher if their personal loans are available to more people and require fewer conditions. This may include lower credit requirements, wider geographic availability, faster funding and easier and more transparent prequalification and application processes.
• Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
• Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.

*Pricing Disclosure:
Fixed rates from 8.99% APR to 29.99% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 02/06/2024 and are subject to change without notice. The average of SoFi Personal Loans funded in 2022 was around $30K. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors. Loan amounts range from $5,000– $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0%-7%, which will be deducted from any loan proceeds you receive. Autopay: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi. Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest rate reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion. This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account. You are not required to enroll in direct deposits to receive a Loan.