Renewing a loan is a lot like applying for a loan for the first time with a few small changes.
When the end of your loan is coming up, your lender might reach out to you to offer a renewal. Sometimes they might offer a better rate if you made regular payments on the first loan and demonstrated your creditworthiness.
If you are renewing with your current lender, the lender will need to review your personal situation and credit score. You’ll need to bring paystubs or receipts showing your income, and bring information on other loans or payments you make. You should also know how much money you need to borrow and for how long. However, because your lender already has an established relationship with you and some information on file, the renewal process is typically quicker than applying for your original loan.
If your loan is a secured loan, which means it is backed by some type of collateral (such as a car, a house, or valuables), the lender will want to check in on the collateral’s status. For example, if you used your house to secure the first loan, your lender will want to ensure you still have the same level of equity when it comes time to renew. Mortgage refinancing, market fluctuations and whether you’ve made your mortgage payments on time or can all impact the amount of equity you have in your home.