However much you might avoid taking loans it sometimes does happen that you are forced to take a debt. Not just take a debt. But it also happens that the rate of interest on the loan can be huge and a significant amount of your monthly income goes towards paying off that debt. Certain times in that situation, you may find it beneficial to refinance the high interest debt with a fresh loan.
What Is Debt Refinancing?
In that context, it is extremely important to understand what is debt refinancing. It essentially means that you pay your existing loan at a huge rate of interest with a completely new loan that is also at a lower rate. Not only would it significantly reduce your monthly installments, your loan term but also bring down the overall interest paid on your entire loan amount. So how can you go about refinancing in a way that can save money?
Growth In Salary
Supposing your salary improves significantly from the time you have taken the loan, you will be able to get a better deal and may even manage to get an offer with a far more attractive rate of interest. Refinancing helps you to renegotiate. Sometimes it even gives you the second chance to get a better deal that offers you a lot more option to readdress your financial liabilities.
Improvement In Credit Score
Changed circumstances often entail an overall improvement in your credit score. Your increase credit score not only reflects improve financial situation for you but also a significantly better situation. This is in terms of paying off the loan amount. This can often lead to your lender offering you significantly better renegotiation terms and sometimes you can use this opportunity to take a fresh loan and refinance your complete existing liability in one go.
Option Of A Fixed Rate
Often your interest rate outgo can be significantly higher as a result of a variable rate of interest or multiple loans at varying rates. When you negotiate a loan to pay off all of it with a fresh loan with a lower interest rate that is also a fixed rate. It can bring down your monthly outgo and also it can work out for a relatively cheaper option for you.
This can also help you consolidate your overall debt situation if you have debt from various sources. It will help you save and simplify your debt liabilities.
Best Credit SG Pte Ltd is a licensed moneylender in Singapore and we are here to help you. Whatever you need, we are here. Call us at +65 6272 5538 if you have any questions. You can also visit us at Blk 372 Bukit Batok Street 31 #01-374 (Level 2) Singapore 650372