When and How to Refinance a Personal Loan

You can refinance a personal loan by taking out a new loan. Depending on the new interest rate, refinancing personal loans could save you money.

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Written by Tara Mastroeni | Edited by Jessica Sain-Baird | Updated May 29, 2024

Personal loan refinancing lenders at a glance

LightStream logo

LightStream: Best for excellent credit borrowers

APR range6.99% - 25.49% (with autopay)**
Loan terms24 to 84 months**
Loan amounts$5,000 - $100,000***
Minimum credit scoreNot specified
Origination feeNone
 Autopay rate discount
 Wide range of loan terms available
 Same-day funding available
 Not an option for bad credit borrowers
 Higher minimum loan amount
 No ability to prequalify

PenFed logo

PenFed Credit Union: Best for small loan amounts

APR range8.99% - 17.99%
Loan terms12 to 60 months
Loan amounts$600 - $50,000
Minimum credit score760
Origination feeNone
 Lower maximum APR
 No origination fee
 Offers joint applications
 Low maximum loan amount
 Credit union membership required
 High minimum credit score requirement

Discover logo

Discover: Best for repayment assistance options

APR range7.99% - 24.99%
Loan terms36 to 84 months
Loan amounts$2,500 - $40,000
Minimum credit score720
Origination feeNone
 Repayment assistance options available for borrowers who are having trouble making payments
 Competitive APR
 No origination fee
 Low maximum loan amount
 Steep late payment fee ($39)
 High minimum credit score requirement

Upgrade logo

Upgrade: Best for bad credit borrowers

APR range8.49% - 35.99% (with discounts)
Loan terms24 to 84 months
Loan amounts$1,000 - $50,000
Minimum credit score580
Origination fee1.85% - 9.99%
 Low minimum credit score requirement
 Interest rate discounts available
 Offers the opportunity to apply with a co-borrower
 Charges an origination fee
 High maximum APR
 Charges late fees ( $10)

SoFi logo

SoFi: Best for same-day funding

APR range8.99% - 29.99% (with discounts)

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.

Loan terms24 to 84 months
Loan amounts$5,000 - $100,000*
Minimum credit score680
Origination fee0.00% - 7.00% (optional)
 High maximum loan amount
 Offers same-day funding
 Interest rate discounts available
 Higher minimum loan amount
 Must accept origination fee for lowest APRs
 Higher minimum credit score requirement

Best Egg logo

Best Egg: Best for debt consolidation

APR range8.99% - 35.99%
Loan terms36 to 60 months
Loan amounts$2,000 - $50,000
Minimum credit score600
Origination fee0.99% - 8.99%
 Will pay your creditors directly
 Allows prequalification
 Option to choose a secured loan
 Charges an origination fee
 Not available in all states
 No joint loan option

BHG Money logo

BHG Money: Best for large loan amounts

APR range13.39% - 24.91%
Loan terms36 to 120 months
Loan amounts$20,000 - $200,000
Minimum credit score660
Origination fee3.00% - 4.00%
 Wide range of loan amounts available
 Longer loan terms available
 Offers opportunity for prequalification
 High interest rates
 Charges an origination fee
 Longer funding times (up to 5 days)

What is personal loan refinancing?

Refinancing a personal loan involves taking out a new personal loan and using the funds to pay off your old loan. Ideally, your new loan will have a lower interest rate or new terms that better suit your needs.

Once you’ve received the funds for your new loan, you’ll be expected to start making payments on it. You’ll continue making regular payments on your new loan balance until it is paid off in full.

Can you refinance your personal loan with a new one from the same lender?

Yes, many lenders offer the option to refinance a personal loan — but it’s best to check in with your lender to be sure.

Note that even though you could refinance a personal loan multiple times, each instance of taking out a new loan can temporarily hurt your credit score. Generally, requirements for refinancing include maintaining good credit and qualifying with the lender.

How to compare personal loan refinancing options

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.

If you’re not sure how much you should borrow, use our personal loan calculator to get a sense of what your monthly payment could look like at a variety of different loan amounts.

How to refinance a personal loan

Here’s how to refinance a personal loan in five easy steps:

  1. Prequalify with multiple lenders: Many personal loan lenders offer the opportunity to prequalify for a loan without impacting your credit score. You can shop around for a loan — and potentially save money — by collecting loan offers from multiple lenders before officially applying for a loan.
  2. Compare loan offers: Once you have a few loan offers in hand, use the metrics above to compare them. Focus on the one that offers the best terms for you.
  3. Submit a new loan application: When you’re ready to officially apply for a personal loan, submit a loan application with your preferred lender. In some cases, you may also need to submit supporting documentation, such as pay stubs, before your application can be completed.
  4. Pay off your old debts: After your application has been approved and you’ve received the funding on your new loan, use the money to pay off your old debts. Be sure to get confirmation from each lender that your existing balances have been paid off in full.
  5. Start making payments on your new loan: Finally, start making payments on your new personal loan according to its payment schedule. You’ll need to continue making payments until the new balance has been fully paid off.

When it’s a good idea to refinance a personal loan

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.

When you should wait to refinance a personal loan

And, here are two signs you should wait to refinance:

  • You can’t get a lower interest rate: Whether market rates have risen substantially since you last applied for a loan or your credit score has dropped, it may not make sense to refinance if you can’t secure a lower interest rate. Interest charges add up, and refinancing into a higher rate could get costly over the life of the loan.
  • You can’t afford the upfront fees: Some loans come with upfront fees. Usually, these are origination fees, which are a percentage of the loan amount that gets deducted from the loan balance. If you can’t afford to shoulder this cost at the moment, it may make sense to wait to refinance.

How we chose the best personal loan refinancing lenders

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.

Frequently asked questions

Opening a new account may temporarily ding your credit score. However, if you are consistent about making your payments, refinancing a personal loan can actually help you build your credit score over time.

Yes, it’s possible to refinance a personal loan with bad credit. Focus your search on bad credit loans for the best results.

Ultimately, refinancing a loan is a personal decision. If you can get a lower rate, refinancing can help you save money and may even help you pay off your loan faster. But if you can’t, refinancing may be more costly than it’s worth.