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: Best for excellent credit borrowers

6.99% - 25.49% (with autopay)

24 to 84 months

Loan Term Disclosure

Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $25,000 loan at 7.49% APR with a term of 3 years would result in 36 monthly payments of $777.54. © 2024 Truist Financial Corporation. Truist, LightStream and the LightStream logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.

$5,000 - $100,000

Not specified

None

Pros

  • Autopay rate discount
  • Wide range of loan terms available
  • Same-day funding available

Cons

  • Not an option for bad credit borrowers
  • Higher minimum loan amount
  • No ability to prequalify

What to know

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As long as you’re not trying to refinance an existing LightStream loan, you can use this lender as your refinance partner. For those who qualify, it could be an excellent choice. LightStream offers loan amounts up to $100,000, the opportunity to take advantage of interest rate discounts and an option to choose same-day funding.

Still, since the company requires good to excellent credit, it may not be a fit for those with lower credit scores. Plus, there’s no option to prequalify for a loan, so it can be hard to shop around for the best rate with this lender.

Read our full LightStream personal loan review.

How to qualify

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In addition to requiring a good or excellent credit score, LightStream also asks that its borrowers have a strong payment history, low debt-to-income ratio, available assets and five years or more of credit history.

PenFed Credit Union: Best for small loan amounts

8.99% - 17.99%

12 to 60 months

$600 - $50,000

Not specified

None

Pros

  • Lower maximum APR
  • No origination fee
  • Offers joint applications

Cons

  • Low maximum loan amount
  • Credit union membership required

What to know

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If you’re looking to refinance with a small personal loan, consider PenFed Credit Union. This lender offers an affordable annual percentage rate (APR) range on loan amounts up to $50,000. In addition, there are also ways to lower your interest rate, including submitting a joint loan application.

That said, like with most credit unions, you’ll need to become a PenFed member in order to receive your loan funds.

Read our full PenFed Credit Union personal loan review.

How to qualify

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Unlike some other credit unions, anyone can become a member of PenFed. Establishing membership involves completing an online application, opening a savings account and funding the account with a $5 deposit.

Discover: Best for repayment assistance options

7.99% - 24.99%

36 to 84 months

$2,500 - $40,000

720

None

Pros

  • Repayment assistance options available for borrowers who are having trouble making payments
  • Competitive APR
  • No origination fee

Cons

  • Low maximum loan amount
  • Steep late payment fee ($39)
  • High minimum credit score requirement

What to know

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Borrowers who want the security of knowing they’ll be in good hands if they experience an unexpected event like a job loss may want to consider Discover. Discover offers repayment assistance options to assist eligible borrowers who are having trouble keeping up with their payments. On top of that, the company boasts a competitive APR and no upfront fees.

At the same time, though, Discover’s maximum loan amount is fairly low and its minimum credit score requirement is fairly high, which means it may not be a fit for all borrowers. You’ll also face a steep late payment fee if your payment arrives after its due date.

Read our full Discover personal loan review.

How to qualify

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In addition to meeting the company’s credit score requirements, you must have a household income of at least $40,000 to qualify for a Discover personal loan. You’ll also need to be 18 years old and have a valid Social Security number.

Upgrade: Best for bad credit borrowers

8.49% - 35.99% (with discounts)

24 to 84 months

$1,000 - $50,000

580

1.85% - 9.99%

Pros

  • Low minimum credit score requirement
  • Interest rate discounts available
  • Offers the opportunity to apply with a co-borrower

Cons

  • Charges an origination fee
  • High maximum APR
  • Charges late fees ( $10)

What to know

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When you need a bad credit loan, you may want to consider Upgrade as your lender. With a minimum credit score of just 580 and the option to apply with a co-borrower, it’s likely to be a fit for most borrowers. Plus, although Upgrade’s APR can get pretty high, there is an opportunity to bring it down with available discounts.

Keep in mind that if you go this route, you may get hit with some pretty hefty added fees. Upgrade charges an origination fee that extends up to 9.99% and a $10 fee on late payments.

Read our full Upgrade personal loan review.

How to qualify

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To qualify for an Upgrade personal loan, you must be of the age of majority where you live (18 or 19, depending on the state). You must also be a U.S. citizen, a permanent resident or living in the U.S. on a valid visa. You must also have a verifiable bank account and working email address.

SoFi: Best for same-day funding

8.99% - 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.

24 to 84 months

$5,000 - $100,000*

680

0.00% - 7.00% (optional)

Pros

  • High maximum loan amount
  • Offers same-day funding
  • Interest rate discounts available

Cons

  • Higher minimum loan amount
  • Must accept origination fee for lowest APRs
  • Higher minimum credit score requirement

What to know

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One of SoFi’s strongest benefits is that it offers fast funding, allowing borrowers to access money the very same day they’re approved for a loan. In addition, SoFi has very few fees. There are no late fees or prepayment penalties. While SoFi’s origination fee is optional, it allows you to access the lender’s lowest APRs.

Be aware that SoFi’s minimum loan amount is fairly high at $5,000, so those looking for small loans may need to go elsewhere. Plus, with a minimum credit score of 680, you’ll need a good credit score to qualify for one of its loans.

Read our full SoFi personal loan review.

How to qualify

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In addition to its minimum credit score requirement (680), SoFi requires that you show proof of employment, have an employment offer starting within 90 days or have income from other sources. You must also be a U.S. citizen, permanent resident or non-permanent resident.

Best Egg: Best for debt consolidation

8.99% - 35.99%

36 to 60 months

$2,000 - $50,000

600

0.99% - 9.99%

Pros

  • Will pay your creditors directly
  • Allows prequalification
  • Option to choose a secured loan

Cons

  • Charges an origination fee
  • Not available in all states
  • No joint loan option

What to know

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If you’re looking to refinance your loan for debt consolidation purposes, you may want to consider Best Egg. The company’s Direct Pay feature streamlines the process by paying your creditors directly. As an added bonus, Best Egg also offers secured loans, which can allow you to access a better interest rate by using your home’s fixtures (if you’re a homeowner) or vehicle equity as collateral.

With that in mind, note that Best Egg charges a mandatory origination fee on all of its loans and its loan products are not available in all states. You can’t get a Best Egg loan if you live in Iowa, Vermont, West Virginia or any U.S. territories.

Read our full Best Egg personal loan review.

How to qualify

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A Best Egg borrower must live in the U.S. and be a U.S. citizen or permanent resident. Loans are not available to residents of Iowa, Vermont, West Virginia, D.C. or U.S. Territories. Borrowers must also be old enough to accept a loan in the state where they live, have a personal checking account, have an email address and have a physical address (that’s not a P.O. Box).

BHG Money: Best for large loan amounts

11.96% - 24.91%

36 to 120 months

$20,000 - $200,000

660

3.00% - 4.00%

Pros

  • Wide range of loan amounts available
  • Longer loan terms available
  • Offers opportunity for prequalification

Cons

  • High interest rates
  • Charges an origination fee
  • Longer funding times (up to 5 days)

What to know

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When you need to refinance a large personal loan, BHG Money may be a good fit. With loan amounts ranging up to $200,000, this lender should offer enough funding to satisfy your refinancing needs. It also offers the opportunity for prequalification, which can make it easier to determine if you’re a good match and a wide variety of loan terms.

Yet, BHG Money’s interest rates are definitely on the higher end, and this lender charges an origination fee. On top of that, it may take up to five days to complete your funding request.

Read our full BHG Money personal loan review.

How to qualify

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BHG Money is not very transparent about its eligibility requirements, but in addition to meeting its minimum credit score requirement of 660, you must be able to provide pay stubs as proof of income verification. Additional documentation may also be required based on your overall creditworthiness.

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.