How to refinance your personal loan

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Refinancing your personal loan could help you save money on costly interest.

If you’re overwhelmed with how much your loan is costing you each month – or you have found a tempting deal to lower the overall interest or extend repayment terms – refinancing could help you better manage your debt.

But first you will want to understand how refinancing works, the costs associated with it and if it’s worth it.

How does personal loan refinancing work?

Refinancing a personal loan works much like refinancing a mortgage: you apply for a loan to cover the amount remaining on your current loan. Once accepted, you can use the funds from the new loan to pay off the other one.

When refinancing, you will still carry the same amount of debt, but you could save money under better terms, a reduced interest rate or lower fees.

Is refinancing the same as debt consolidation?

Not exactly. Although they work the same way, consolidating involves paying off multiple loans at once while refinancing only deals with one loan.

Compare personal loans

Table: sorted by representative APR, promoted deals first
Name Product Total Payable Monthly Repayment Representative APR Link
Hitachi Personal Finance Hitachi Personal Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 3.2% p.a. (fixed). Representative APR 3.2% and total payable £10,493.64 in monthly repayments of £291.49.
NatWest Existing Customer Personal Loan (specific eligibility criteria apply)
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Representative example: Borrow £10,000.00 over 3 years at a rate of 3.4% p.a. (fixed). Representative APR 3.4% and total payable £10,524.24 in monthly repayments of £292.34.
Post Office Money® Personal Loan
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Representative example: Borrow £15,001.00 over 3 years at a rate of 3.1% p.a. (fixed). Representative APR 3.1% and total payable £15,718.32 in monthly repayments of £436.62.
Royal Bank of Scotland Existing Customer Personal Loan (specific eligibility criteria apply)
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Representative example: Borrow £10,000.00 over 3 years at a rate of 3.4% p.a. (fixed). Representative APR 3.4% and total payable £10,524.24 in monthly repayments of £292.34.
AA Member Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 3.0% p.a. (fixed). Representative APR 3.0% and total payable £10,462.68 in monthly repayments of £290.63.
Zopa Personal Loan
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Representative example: Borrow £10,000.00 over 5 years at a rate of 8.8% p.a. (fixed) with an application fee of £240.00. Representative APR 9.9% and total payable £12,602.87 in monthly repayments of £210.05.
Lloyds Bank Existing Customer Personal Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 3.9% p.a. (fixed). Representative APR 3.9% and total payable £10,601.64 in monthly repayments of £294.49.
Lending Works Personal Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 5.8% p.a. (fixed) with an application fee of £0.00. Representative APR 10.0% and total payable £11,543.40 in monthly repayments of £320.65.
M&S Bank Personal Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 2.9% p.a. (fixed). Representative APR 2.9% and total payable £10,447.20 in monthly repayments of £290.20.

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Name Product Total Payable Monthly Repayment Representative APR Link
1st Stop Personal Loans Ltd Homeowners Unsecured Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 31.3% p.a. (fixed). Representative APR 31.3% and total payable £14,801.76 in monthly repayments of £411.16.
118 118 Money Personal Loan (fair credit)
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Representative example: Borrow £2,000.00 over 2 years at a rate of 35.9% p.a. (fixed). Representative APR 35.9% and total payable £2,710.32 in monthly repayments of £112.93.
besavvi Personal Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 18.9% p.a. (fixed). Representative APR 18.9% and total payable £12,913.20 in monthly repayments of £358.70.
Everyday Loans Personal Loan (fair credit)
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Representative example: Borrow £10,000.00 over 3 years at a rate of 34.4% p.a. (fixed). Representative APR 34.4% and total payable £15,269.04 in monthly repayments of £424.14.
Bamboo Personal Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 49.7% p.a. (fixed). Representative APR 49.7% and total payable £17,537.04 in monthly repayments of £487.14.

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With no guarantor

Name Product Total Payable Monthly Repayment Representative APR Link
Likely Loans Personal Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 59.9% p.a. (fixed). Representative APR 59.9% and total payable £19,010.16 in monthly repayments of £528.06.
118 118 Money Personal Loan (poor credit)
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Representative example: Borrow £2,000.00 over 2 years at a rate of 99.9% p.a. (fixed). Representative APR 99.9% and total payable £3,804.00 in monthly repayments of £158.50.
Everyday Loans Personal Loan (poor credit)
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Representative example: Borrow £10,000.00 over 3 years at a rate of 58.4% p.a. (fixed). Representative APR 58.4% and total payable £18,795.60 in monthly repayments of £522.10.

Compare up to 4 providers

With a guarantor

Name Product Total Payable Monthly Repayment Representative APR Link
TFS Loans Guarantor Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 39.9% p.a. (fixed). Representative APR 39.9% and total payable £16,091.64 in monthly repayments of £446.99.
Bamboo Guarantor Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 49.7% p.a. (fixed). Representative APR 49.7% and total payable £17,537.04 in monthly repayments of £487.14.
UK Credit Limited Tenant Guarantor Loan
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Representative example: Borrow £6,000.00 over 3 years at a rate of 47.9% p.a. (fixed). Representative APR 47.9% and total payable £10,364.04 in monthly repayments of £287.89.
Amigo Guarantor Personal Loan
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Representative example: Borrow £5,000.00 over 3 years at a rate of 49.9% p.a. (fixed). Representative APR 49.9% and total payable £8,782.92 in monthly repayments of £243.97.
Trusttwo Trusttwo (Tenant Guarantor) Personal Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 49.7% p.a. (fixed). Representative APR 49.7% and total payable £17,537.04 in monthly repayments of £487.14.
1plus1 Loans Guarantor Loan
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Representative example: Borrow £10,000.00 over 3 years at a rate of 47.8% p.a. (fixed). Representative APR 47.8% and total payable £17,259.12 in monthly repayments of £479.42.

Compare up to 4 providers

With a guarantor who is a homeowner

Name Product Total Payable Monthly Repayment Representative APR Link
UK Credit Limited Homeowner Guarantor Loan
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View details
Representative example: Borrow £14,000.00 over 3 years at a rate of 29.9% p.a. (fixed). Representative APR 29.9% and total payable £20,426.40 in monthly repayments of £567.40.
Trusttwo Trusttwo (Homeowner Guarantor) Personal Loan
Check eligibility
View details
Representative example: Borrow £10,000.00 over 3 years at a rate of 49.5% p.a. (fixed). Representative APR 49.5% and total payable £17,507.88 in monthly repayments of £486.33.

Compare up to 4 providers

Please note: You should always refer to your loan agreement for exact repayment amounts as they may vary from our results.
Late repayments can cause you serious money problems. See our debt help guides.

Why should I refinance my personal loan?

People choose to refinance their personal loans for many reasons, but it boils down to either finding a better deal or consolidating debt.

  • You have found a better deal that you are eligible for

    If you think you’ve found a better deal, consider using a personal loan repayment calculator to compare the two loan options and see if the move is worth it. When comparing loans, focus on interest rates but also look at ongoing fees and repayments as well as loan establishment costs. You could get a better idea of the total cost of the loan by evaluating the APR. Consider the features of a loan to make sure it suits your needs – for example, if you’d like the freedom to pay off your loan early, confirm there is no prepayment penalty.

  • You want lower payments

    If you would like to pay less each month on your personal loan, you could refinance it to extend the repayment period. Simply find a loan with a longer term. Once approved, you can use those funds to pay off your existing personal loan and then enjoy paying less each month on the new one. Keep in mind that lower monthly payments usually means more in total interest over the life of the loan.

  • Your credit score has improved

    If your credit history has significantly improved from the time you first applied for your loan, you may also qualify for much better rates during the refinance.

  • You want to top up your loan

    If you have an existing loan, but are interested in borrowing more, you may be eligible to top it up. Topping up a loan doesn’t actually add more money to the existing loan. Instead, you basically apply for a new loan for the remaining balance and the extra amount you want to borrow. The new loan may have a different interest rate and term from your initial loan, and you’ll likely have different monthly repayments.

  • You want to take a break from repayments

    Some lenders offer loans with repayment holidays for the first two months. This means that you won’t have to make a repayment for the first two months after your loan is approved. If you need a temporary respite from making repayments, one way to do it would be to refinance to a new loan that offers a repayment holiday.

  • You want to save on interest by paying it back sooner

    If you’d like to save on the interest you pay on the loan, you could refinance it to shorten the repayment period. Simply find a loan with a shorter term. Keep in mind that a shorter term will mean higher monthly repayments.

  • You want to take a guarantor off your loan

    There are many reasons you may want to remove a guarantor off your loan. These could be extenuating circumstances such as death or divorce. In some cases the guarantor may be looking to buy a house and does not want the the loan to be tied to his or her credit. Many lenders don’t allow you to remove a guarantor off a loan so it’s important to review the terms and conditions of your loan. Refinancing with a new lender that allows you to remove the guarantor is one way to do it.

How to renegotiate a personal loan

Like the lender you’re working with? Another way to get better rates and terms is to renegotiate your personal loan with your current lender. Follow these steps:

  • Check your credit. This means your credit score and your credit report. You can get an estimate of your credit score by using any of the free credit reporting agencies available online. Check your credit report for errors to make sure that your score is accurate.
  • Reread the terms and conditions. Before reaching out to your lender, read your terms and conditions one more time to make sure that there’s nothing preventing you from renegotiating your loan. If there is, refinancing might be a better option.
  • Pre-qualify with the competition. One way to strengthen your argument is to come to your lender with a counter-offer from another lender on a refinancing loan. If your lender thinks it could lose your business, it might make you an even more competitive offer.
  • Talk to your lender. This could take some time. Typically, the higher-up the person you are speaking to is, the more likely you’ll be able to negotiate a change. You can start by calling customer service and asking to speak to the representative’s manager until you’re on the phone with someone who has real power.

Frequently asked questions

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.

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