Refinancing loans can save people money by reducing monthly expenses. Installment loans are a type of loan that comes in many different forms. Personal loans and automobile loans are two common types of installment loans. As the name indicates, installment loans are loans that allow a borrower to pay off the loan in a number of installments over a period of time.

Refinancing an Installment Loan

While the process for refinancing an installment loan differs from the process of refinancing a conventional mortgage loan, borrowers are able to refinance installment loans under the right circumstances. In order to refinance an installment loan, borrowers will need to take out a new loan to pay off the original loan. The refinanced loan would be paid off in a series of installments, much like the previous loan would have been. In order for a borrower to refinance, they will need to have a credit score that indicates that they will be able to repay the loan they are applying for. To find out if a borrower can qualify for refinancing, they should consult a banking professional at the financial institution that owns their loan.

The Pros of Refinancing

Borrowers may wonder how paying off one loan just to get another one can be a good idea. One of the main reasons a borrower may consider refinancing is the opportunity to get a lower interest rate. Lower interest rates can mean lower monthly payments that can result in greater savings over time. Interest rates can fluctuate, but whether reduced rates are offered through bank specials or are available due to cuts by the Federal Reserve, lower interest rates are a great incentive to borrowers of all kinds.

Another reason borrowers may consider refinancing could be to cut down on the number of monthly payments they owe. Refinancing offers the ability to roll several loans into one or two. Often times, the minimum payment on one loan is less than the combined amount of several minimum payments spread across a variety of loans.

The Cons of Refinancing

Refinancing an installment loan can include fees and costs. It�s important to learn what the costs of refinancing your loan would be with different refinancing lenders. Calculate any fees into your total loan costs to ensure that there is a benefit to refinancing your loans. In some cases, application, processing and origination fees plus and early repayment penalties might mean that the new loan can cost more than the initial.

Things to Consider

There are many things to think about when considering refinancing an installment loan. Refinancing can lengthen the overall time that a borrower stays in debt. However, refinancing can also let a borrower roll multiple loans into one and potentially lower interest rates and monthly payments. It is important to take all of the pros and cons into account before making the decision to refinance. By evaluating the setup of a current loan versus the interest rates and steps needed to refinance in the current economic climate, borrowers can make an educated decision on what the best option is for their specific circumstances.

The content on this site is for informational purposes only and is not professional financial advice. Blue Trust Loans does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation.

Hummingbird Funds, LLC is a sovereign enterprise, an economic development arm and instrumentality of, and wholly-owned and controlled by, the Lac Courte Oreilles Band of Lake Superior Chippewa Indians (the “Tribe”), a federally-recognized sovereign American Indian Tribe. This means that the Hummingbird Funds’ installment loan products are provided by a sovereign government and the proceeds of our business fund governmental services for Tribe citizens. This also means that Hummingbird Funds is not subject to suit or service of process. Rather, Hummingbird Funds is regulated by the Tribe. If you do business with Hummingbird Funds, your potential forums for dispute resolution will be limited to those available under Tribal law and your loan agreement. As more specifically set forth in Hummingbird Funds’ contracts, these forums include informal, but affordable and efficient Tribal dispute resolution, or individual arbitration before a neutral arbitrator. Otherwise, Hummingbird Funds is not subject to suit or service of process. Neither Hummingbird Funds nor the Tribe has waived its sovereign immunity in connection with any claims relative to use of this mobile site. If you are not comfortable doing business with a sovereign instrumentality that cannot be sued in court, you should discontinue use of this website.