When you refinance a loan, you replace your current loan with a new loan. But refinancing may be a bit of a misleading term because when you refinance, you don’t tinker with your existing loan – you get a brand-new loan with brand-new terms.
The general goal when you refinance is to save money on interest. But you can change other loan terms too, like the repayment period or the monthly payment.
Technically, there’s no waiting period to refinance. As long as you’ve started making payments on your personal loan, you can refinance it at any time.
But before you decide to refinance, you should carefully consider whether the new interest rate and loan terms will outweigh the upfront costs to refinance, such as the origination fee.
And you should keep an eye on potential interest rate hikes. If interest rates are going up, you may want to wait or refinance your loan sooner rather than later.