Refinancing is when you take out a new loan to pay off another loan, and adjust the terms of the loan agreement. If you qualify for refinancing, you may be able to take advantage of lower interest rates and reduce your monthly payments by extending the loan term.  Refinancing can be a great option if your credit score has improved since you applied for the original loan or if your financial plans would benefit from consolidation. It can also be beneficial if you’re struggling to make higher monthly payments, but it may also mean paying more in interest over the course of the loan.