Refinancing at the right moment can lead to saving money and getting yourself out of a financial strain that your debt has put you into. Before you søke refinansiering, i.e. before you apply for refinancing, though, you have to check if it’s really worth it. Most of the times, doing this will improve your financial situation, but you do need to be smart about when to do this and why to do it. Naturally, you’ll also have to be smart about how to do it, because you want to get the best, and possibly the cheapest, refi option, and doing that will require you to put some effort into finding it. Read more on whether you should refinance.
When Is Refinansiering Worth It?
As mentioned, there are a few things to check before applying for this solution, including whether it is actually a good idea. Making refi worth your while is a must, and doing it at the right moment and for the right reasons will allow for that. Below I’ll tell you more on when refi is actually worth it and when you should do it, which will lead you to figuring out if your current situation is a clear indicator that refinansiering is in order and that you could benefit greatly from it, instead of sticking to the old debts and old terms that could be draining your budget.
- If You Have High Credit Card Debts
Credit cards are useful little financial tools, as long as they’re used wisely and responsibly. What happens, though, if you get a bit carried away with those and wind up incurring some debts? If you don’t repay them on time, interest will keep accumulating, and the interest rate won’t exactly be favorable, meaning that you could easily find yourself in a vicious circle, constantly trying to repay your credit cards and constantly being more in more in debt, due to the annual effective interest rate that can be as high as 35%. Refinancing is in this case the perfect option that gets you out of the vicious circle, allowing you to get a loan to cover all of those credit card debts and, of course, allowing for a much lower interest rate on that particular loan.
- If You Have Huge Debt From Installments
Everyone gets that huge credit card debt is a good reason to refinance, but few people understand that installment payments can be just as burdensome. Installment purchases also come with higher interest rates, and refi can help you lower those. While making certain larger purchases this way is often the only move for some people, you should know that interest rates are almost always lower on loans than on those installment purchases, meaning that getting a loan is the more favorable option.
- If Your Previous Loan Is Expensive
You might have already gotten a loan previously, only to realize later that you haven’t been quite smart about it and that you got a poor deal. Or, perhaps you got a poor deal due to your own financial circumstances that influenced the quality of the interest rates. In any case, if your previous loan is expensive, refinancing can, as explained at billigeforbrukslån.no/refinansiering/, definitely pay off. The same goes for people that have a few expensive small loans, as consolidating those debts through a refi solution can result in paying much less interest overall, and thus saving money.
- If You Need To Switch Your Rate Type
Switching your rate type is another important refi reason. Usually, the switch is done from a variable to a fixed rate, after the variable one begins increasing too much, without a prospect of lowering. Fixed rates provide you with the luxury of knowing precisely what your installment amount will be every single month, while the variable one carries the risk of increasing all of a sudden and without a warning. Refinancing to switch to a fixed rate is certainly a good option.
- Or Change Your Repayment Terms
Changing your loan tenure, or the amount you’ll be paying monthly, is also a good reason to refinance. People do this when their financial circumstances have changed, either for better or for worse. If they’ve changed for the better and you can now afford higher monthly payments, you can refinance to shorten the tenure and thus get out of debt faster. On the other hand, if it has changed for the worse, you could need to refinance so as to lengthen the tenure and thus decrease the monthly installment amount.
How To Get A Good Option?
Deciding when to use the refinansiering option is only half of the work you have to do. Deciding which specific option to use is the second half, as it’s clear that not all of those will be favorable and that not all of those will lead to proper debt reduction and to saving money, and that’s your ultimate goal. Choosing the best solution can be tricky, especially if this is your first time applying for refi at all, but it can be done the right way if you follow a few simple tips I’ll provide for you below.
- Apply For More Options
We all want the best interest rates and the best term overall when borrowing money, which is precisely why you have to consider when to refinance your personal loan, but there’s another thing to remember here. Most likely, you won’t get to check out the precise terms, and especially not the interest rates, if you don’t go through with the application process. The application won’t commit you, though, as that’s done later through a lending agreement, so it can serve to help you check those terms out. Thus, applying for more options is a smart move.
- Compare The Offers You’ll Get To The Terms You Already Have
Comparing the offers you’ll get among themselves is important, but not enough. You also have to compare those terms offered to the terms you already have on your current loans or debts. By doing so, you’ll avoid the risk of getting poorer terms on your new loan and you’ll actually succeed in saving money through refinansiering.
- Go For Lowest Interest Rates
The rule to follow is to always go for as low interest rates as you can get. Clearly, the interest rates influence the whole quality of your new loan, as well as make it possible for you to save money, which is what you’re looking to do. Thus, comparing the interest rates and going for the lowest ones should be your goal here.