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Reasons to Refinance

Reasons to Refinance


Refinancing a loan is a fairly common practice for consumers, and refinancing debt can be beneficial if done right. “Essentially, refinancing replaces an old loan with a new one with terms that are better for your situation.” (BANZAI) There are multiple reasons why someone would consider refinancing a loan, so let’s start by evaluating what those reasons might be.

Here are a few reasons some people choose to refinance a loan:

To save money.

  • Typically, when refinancing a loan, the consumer would look at options that give them a lower interest rate than their current loan. This could save money over the life of the loan since the consumer would pay less in interest over the remaining terms of the loan. Or, another way to save money when refinancing is by saving with a lower monthly payment, that way you could spread money further throughout each month.

To change the length, or term, of the loan.

  • Depending on your situation you may want to pay the loan off sooner which means you’d want a shorter term for the loan, or some may need a longer-term for the loan in order to budget their finances throughout that time frame. Typically, when shortening the length of a loan, the payment will likely increase. If you make the term longer, this would likely lower your monthly payment.

To pay their debt off sooner.

  • Sometimes consumers choose a longer-term for a loan originally, and then decide they’d like to pay off their debt sooner so may refinance in order to shorten that term and pay off their debts. If your goal is to pay off debt sooner, evaluate your current loan. If you have a low-interest rate, you may want to keep your current loan and simply pay more on the debt each month. But, check to see if there is a pre-payment penalty on the loan (meaning, you will be charged a fee if you pay off the loan early.) If you refinance a new loan, it could result in a higher interest rate and cost you more in interest.


Refinancing Auto Loans

Many of our members come to us to refinance auto loans. This is typical because they showed up at a dealership either without a pre-approval and financed through the dealership, or they received ‘special’ dealership pricing or a rebate for financing with the dealer. It may seem like a good idea at the moment, but if you’re looking for something better long-term, an auto loan refinance at CSE may be right for you!

It’s important to always check if your current loan has any prepayment penalties or other early termination fees. If they do, be sure to weigh the option of refinancing and having to pay those fees.  Then, ask yourself, would it still be worth it to refinance. Another item to consider is if there would be any ‘new’ fees added to taking out the new loan. Luckily, at CSE there are no fees associated with applying for or processing an auto loan.


A beneficial tool in finding out if refinancing may be a good option for you is our Auto Refinance Calculator

You can access that as well as more information about refinancing loans through our BANZAI! article here:


Source: (BANZAI) -



Though we hope you find this content useful, it is only intended to serve as a guide. Your next step is to speak with a qualified professional. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice.  Do not rely upon the information provided in this content when making decisions regarding financial or legal matters without first consulting with a qualified, licensed professional.



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