Refinancing a loan – how much does it cost and how does it work?

Refinancing a loan is one of several options in the event of a problem with timely repayment . If you are wondering how to get out of debt so as not to fall into a spiral of debts and not expose the bailiff, then check how it works and what exactly is refinancing a loan.

Keep an eye on your loan repayment date

Keep an eye on your loan repayment date

Getting a quick loan online is very easy – just take a few minutes to complete the application and wait for the lender’s decision. What’s more, a large part of loan companies offer free payday loans, so you don’t have to worry about additional costs – you will pay back exactly what you borrowed. There is one condition: the loan will be returned within a time limit which will be clearly stated in the loan agreement. The payday payday is 60 days. I wrote more about online loans in the article: Online account loan – what is worth knowing?

Repayment of a quick cash loan can sometimes cause problems. You can skip the final day of repayment due to your carelessness and forgetfulness, or find yourself in a crisis situation and simply don’t have the means to pay back the loan. The worst way out of this situation is to wait and not react. Why?

After the repayment deadline, the loan companies will start the debt collection procedure, which will result in high fines and interest for late repayment, as well as unpleasantness related to entry into debtors’ databases, contractual penalties and telephones from debt collection departments.

That is why it is worth knowing how the loan refinancing service works. You can avoid large fees for late repayment but be careful.

Refinancing a loan – what is it?

Refinancing a loan - what is it?

Refinancing a loan is the transfer of current debt from one financial entity to another. In short, it is a new financial commitment that will be used to pay back the current loan.

The whole point is that you won’t get money from the new loan – the funds will be transferred to the lender who is in arrears with payment, thanks to which the parties will have 100% certainty that the new loan will be used to pay back the previous one. It is the lender with whom you have a problem with repayment that chooses a friend loan company in which he will submit a refinanced loan application on your behalf.

How does the refinancing service work?

If you have a problem paying off your current loan and you are 100% sure that you will not be able to settle your debt within the prescribed period, be sure to contact your lender to refinance the debt. The refinancing loan is the best and the cheapest option available. How to use it?

  1. Check if the lender you have a loan from is using a refinancing loan (you will find information on the company’s website after logging in to the customer’s account or by phone).
  2. If you know that you can’t pay your debt before the repayment deadline, report your inability to repay your lender and apply for a refinancing loan.
  3. The lender will apply on your behalf for a refinanced loan to another loan company.
  4. After receiving a positive decision from the “new” Lender, this company will transfer the loan to the “old” non-bank company, thanks to which the total amount of your debt will be repaid.
  5. You will get a new loan to be repaid with a new repayment date at another loan company.

Refinancing takes place only between two loan companies.