How does refinancing work?

Refinancing is the process of taking out a new loan to pay off an existing loan. The new loan typically has more favorable terms, such as a lower interest rate, lower monthly payment, or a shorter repayment term.

For example, if you have a highinterest rate loan, you may be able to refinance to a loan with a lower interest rate, which can save you money on interest charges over the life of the loan. Alternatively, if you have a longer repayment term and want to pay off your debt faster, you may be able to refinance to a loan with a shorter repayment term.

When you refinance a loan, the new lender will typically pay off the balance of your old loan, and you will start making payments on the new loan. It's important to carefully compare the terms of the new loan to your existing loan to make sure you are getting a better deal overall.