Refinance

The process of paying off an existing loan with a new loan, typically in order to obtain a lower interest rate or to change the terms of the loan.

More Details

Refinancing is the process of replacing an existing loan with a new loan that has different terms or a lower interest rate. This can be done in order to save money on interest payments, change the repayment period, or modify the terms of the loan in some other way.

Example

Imagine that you have a car loan with an interest rate of 7%. You might decide to refinance your car loan in order to obtain a lower interest rate and reduce your monthly payments. To do this, you would need to apply for a new loan and use the funds to pay off your existing car loan. If you are successful in obtaining a lower interest rate, you could save money on your monthly car loan payments and pay off your debt more quickly.

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