Consolidating Debt through Refinancing
Sometimes it’s wise to trade your original loan for one with a better term or interest rate.
Refinancing involves replacing an existing loan with a new loan that works better for you. Your new loan should have a lower interest rate and a term that meets your needs.
Unlike other types of debt consolidation, refinancing involves trading one loan for a different, better loan. Consolidating with a personal loan or credit card balance transfer often means rolling multiple loans into a different, better loan.
Many kinds of loans, including mortgages, car loans and student loans, can be refinanced—possibly saving you thousands of dollars. And people don’t just refinance to get a better interest rate. Your primary reason to refinance might be to get a longer term that lowers your monthly payment or a shorter term that helps you pay off your loan sooner.
To determine which consolidation method best fits your life, consider talking to an expert such as a credit counselor. UW Credit Union offers free credit consultations and appointments with other knowledgeable professionals—financial specialists and student lending experts, for example—who can help you learn about refinancing.