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Debt Consolidation

How and When You Can Refinance Your Personal Loan

Written by Ashley Donohoe, FPWM®, CFEI®, AFSP
Finance Writer
April 6, 2026 | 8 min read
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Whether you aim to free up cash flow, simplify debt, or just make managing your everyday finances less overwhelming, a personal loan refinance may be the right solution for reaching your financial goal. Refinancing is a straightforward way to lower your rate, reshape your monthly payment, or consolidate higher-interest balances into one fixed payment—especially if your credit and income have improved.

But before you apply, take time to understand the benefits, costs, and steps associated with the process. Below, we’ll explain when making this financial move makes sense and walk you through how to refinance a personal loan with your needs in mind.

 

Key TAKEAWAY

Qualified borrowers can refinance a personal loan to save on interest, get a lower monthly payment, or simplify their finances. The process involves determining whether refinancing makes sense, verifying eligibility, completing an application, paying off the old loan, and making the new payment. Consider total costs and savings.

Can you refinance a personal loan?

Yes, you can refinance a personal loan as long as you meet your lender’s eligibility requirements. Refinancing simply means taking out a new loan to pay off an existing one, often to secure better terms, lower your rate, or change your repayment schedule.

Common reasons why you might want to pursue a personal loan refinance include:

  • You’ve improved your credit score and become eligible for a lower rate.
  • You want to consolidate high-interest credit card debt or other debts into a single fixed payment with a refinanced personal loan.

 

See your offer † real fast

Just a few easy steps to get prequalified!

 
† This is not a guaranteed offer of credit and is subject to credit approval.

How much can you save by refinancing?

For high-income professionals and business owners, refinancing a personal loan can provide flexibility and measurable interest savings if structured correctly.

While you should calculate your payment and interest savings based on your own loan details, let’s look at a hypothetical example to see the potential impact of refinancing.

Imagine you refinance a $40,000 personal loan from an 18% APR to 12% APR over a 7-year term. This move could lower your monthly payment by about $135 and save you roughly $11,300 in interest, assuming a fixed repayment schedule and no fees.

Here's an example of savings using a $40,000 personal loan on a 7-year term:

 

Current loan

Refinance loan

APR

18%

12%

Monthly payment

~$841

~$706

Total interest

~$30,620

~$19,313

Total cost

~$70,620

~$59,313

Advertised rates are subject to change without notice.
Monthly payment is a representative example for illustrative purposes only and does not reflect actual customer information.

When and how often can you refinance a personal loan?

You can often refinance as soon as you begin repayment but check your loan contract and lender’s policies. Additionally, there’s generally no hard limit on how often you can refinance a personal loan. However, an important question is whether it makes financial sense, as refinancing repeatedly can wipe out the benefits if fees and interest raise your costs.

Generally, refinancing your personal loan is most effective when your credit improves, market rates fall, or your financial priorities change (such as wanting to speed up your payoff or lower your payment to better suit your cash flow).

5 steps to refinance your personal loan 

To have the best chance of qualifying for a personal loan refinance and to understand your savings, prepare your finances for the process and gather the information your lender will need. Once you reach the actual application stage, the process is usually straightforward. We recommend following these steps to refinance your personal loan.

 

1. Check your eligibility

Lenders will look at your credit score, credit history, and income to determine whether your financial situation justifies offering you a new loan. Plus, you’ll usually need to have a minimum remaining loan balance to qualify for a refinance.

Take these key steps to verify your eligibility:

  • Pull your credit reports: Use AnnualCreditReport.com to get your reports from the three credit bureaus—Experian, TransUnion, and Equifax. Look for any issues that could harm your credit score or affect your chances of approval, such as account balances, reported delinquencies, or bankruptcies.
  • Calculate your debt-to-income ratio: Lenders that offer personal loans often look for a debt-to-income ratio below 36%, though some (like BHG) might accept higher ratios, especially if you are a high earner.
  • Check your personal loan balance: Refer to your latest loan statement to see your remaining balance and compare it with your potential lender’s requirements.

 

2. Evaluate the cost of refinancing your personal loan

A smart refinance adds up on paper: Look at total costs, not just the advertised rate.

The key costs to review include:

  • Origination fee: This helps cover the costs of processing, underwriting, and funding your new loan. It often ranges from 1% to 10% of the new loan amount and is sometimes deducted from the loan proceeds.
  • Prepayment penalty: While BHG Financial doesn’t charge this fee, some other lenders penalize you for paying off a loan early. You might pay a flat amount or a percentage of your remaining balance or interest.
  • Third-party charges: You might also encounter additional costs, such as documentation, verification, or transfer fees.

 

To confirm that refinancing is the right decision for your debt, compare the total cost of your current loan against the total cost of the new loan. Then, calculate your break-even point, or the time it takes for monthly savings to exceed upfront fees.

 

3. Find the right lender for you

To make sure you choose the right lender, consider prequalifying with the ones you are interested in so you can compare rates, monthly payment amounts, and other terms without impacting your credit score.

Once you have multiple prequalification offers, compare each with these criteria in mind:

  • APRs
  • Fees
  • Loan amounts
  • Repayment term options
  • Approval and funding time
  • Fund disbursement methods (directly to your creditors or to you)
  • Customer service responsiveness

 

Make sure to check reviews as well—Trustpilot and the Better Business Bureau are great sources for real customer feedback.

 

4. Submit an application

When you’re ready, fill out a full refinance application. Be prepared to provide the following items to your lender:

  • Government-issued ID
  • Proof of address
  • Proof of income (pay stubs, W2s, 1099s, or tax returns)
  • Details on existing debts and the personal loan you’re refinancing

 

After you submit your application and documentation, your lender will let you know if it needs anything else. Once approved, your lender will disburse your funds via the chosen method. Be sure to verify the exact process and timing.

 

5. Pay off your existing loan and begin repayment

If your new lender gives you the loan funds directly, you’ll need to contact your original lender to arrange for payoff. Otherwise, your new lender will handle the process for you.

Either way, make sure your old loan is fully paid. Also, until you receive written confirmation, continue making payments on the original loan to avoid late fees or negative credit score impacts.

Finally, set up autopay on your new personal loan. Not only will this save you the hassle of scheduling monthly payments, but it will also help you avoid late payments and maintain a good credit score. Some lenders offer small autopay discounts.

Consolidating debt while refinancing personal loans 

If you’re carrying multiple debts—such as credit cards, personal loans, or medical bills—you can often consolidate them as part of a refinance. By rolling balances into one new personal loan, you can enjoy easier debt management with these benefits:

  • One fixed monthly payment and a clear payoff timeline
  • Potentially a lower APR if you qualify for a better rate (especially versus high-interest credit cards)
  • A structure aligned to your goals, whether that’s a shorter term to minimize interest charges or a longer term to give your budget more breathing room.

 

But before including debt consolidation in your refinance plans, consider these factors:

  • Total cost: The Consumer Financial Protection Bureau advises personal loan borrowers to review their loan documents and account for all associated costs of taking out a new loan, such as origination and documentation fees. Plus, account for prepayment penalties that may apply to the debts you’re consolidating.
  • Disbursement method: Some lenders pay creditors directly, while others give you funds to pay them off yourself. Ask your lender about the process and timing so you know what to expect on your end.
  • Credit card habits: After consolidating your credit card debt, consider keeping your cards open to preserve your credit history, as the average account length is a factor in your credit score. It’s also smart to avoid adding new balances and use autopay to stay on track.  
  • Payoff strategy: If you can afford it, pay more than the monthly minimum to reach your target payoff date faster and reduce your total interest. You can also make extra payments and apply any windfalls, such as bonuses, toward your principal.

Explore consolidating your debts with BHG Financial 

BHG Financial offers high-limit unsecured loans of up to $250,0001 to qualifying clients, with fixed, predictable rates and terms up to 101,2 years. Prequalifying won’t impact your credit score,3 and you’ll enjoy U.S.-based concierge support along the way.

Our team can help you create a refinance and consolidation plan that aligns with your goals. We also offer quick approval decisions and funding in as few as five days.4

Ready to learn more about how you could save money and improve your cash flow? Speak with a BHG expert or explore BHG’s personal loan options today.

 

See your offer † real fast

Just a few easy steps to get prequalified!

 
† This is not a guaranteed offer of credit and is subject to credit approval.

Personal loan refinance FAQs

 

How do I get the best personal loan refinance rate?

To get the best personal loan refinance rate, boost your credit score by making on-time payments, lowering your credit card utilization, and correcting errors on your credit reports. Reduce your debt-to-income ratio by paying down revolving balances or increasing your reportable income. Also, shop around for lenders and ask about potential rate-reducing options, like enrolling in autopay.

 

Will refinancing a personal loan affect my credit score?

Refinancing a personal loan can initially cause a small, temporary dip due to the hard inquiry required to fund. If you consolidate credit card balances into an installment loan, your revolving utilization may drop, which can benefit your score.

 

Is refinancing a personal loan right for me?

To decide whether refinancing is right for you, ask yourself whether your total interest and fees will decrease and what your break-even point is. Also, consider the purpose of refinancing, such as changing your monthly payment (which affects your term decision and interest costs) or consolidating high-interest debt to save money. Plus, check on potential prepayment penalties or timing issues.

Check my rate

See your offer † real fast

Just a few easy steps to get prequalified!

 
† This is not a guaranteed offer of credit and is subject to credit approval.

Not all solutions, loan amounts, rates or terms are available in all states.

1 Terms subject to credit approval upon completion of an application. Loan sizes, interest rates, and loan terms vary based on the applicant's credit profile.



2 Personal Loan Repayment Example: A $60,000 personal loan with a 7-year term and an APR of 17.06% would require 84 monthly payments of $1,191.38.

3 There is no impact on your credit for applying. For personal loans, a complete credit history, which will appear as an inquiry on your credit report, will be performed upon acceptance and funding of the loan and may impact your credit.

4 This is not a guaranteed offer of credit and is subject to credit approval.

Consumer loans funded by Pinnacle Bank, a Tennessee bank, or County Bank. Equal Housing Lenders. Equal Housing Lenders icon

No application fees, commitment, or impact on personal credit to estimate your payment.

For California Residents: BHG Financial loans made or arranged pursuant to a California Financing Law license - Number 603G493.

 

 

 

If you’re feeling weighed down by credit card debt, you’re not alone. High interest rates can feel like an uphill battle, making it easy to fall behind and tough to catch up. 

Understanding how to pay off credit card debt is the first step toward taking control of your debt and reclaiming your financial well-being. Here are a few practical strategies to eliminate credit card debt.

 

Key considerations

  • If you have a significant amount of high-interest debt and a good credit score, a debt consolidation loan can be a viable option for paying off credit card debt. For smaller debts, a balance transfer card could help you tackle debt faster.
  • If not consolidating or using a balance transfer card, set a goal and a budget for repayment; targeting one debt at a time using the snowball or avalanche method can help reduce your balances methodically.
  • Gradually exceed monthly minimum payments whenever possible to decrease your total interest over time. Even small extra payments can make a big difference in your credit card debt over the long term.

 

Why is credit card debt hard to pay off?

U.S. credit card balances have surpassed $1.21 trillion, according to the Federal Reserve, driven partially by high APRs.

Credit card debt is difficult to overcome. Even if you don’t make additional purchases, the interest compounds. Only paying the minimum each month means you will carry the debt from month to month, increasing your debt as you accumulate interest charges.

For example, if you’ve amassed $50,000 in credit card debt on a card with a 23% APR, you could pay up to $11,500 per year in interest. Without a plan in place to address the debt proactively, it can become a significant burden. 

To start, pay as much as you can toward the debt. Some common ways to do this effectively and consistently include using the debt snowball or debt avalanche method. 

 

What is the debt snowball method?

If you have balances on multiple cards, one of the best strategies to eliminate credit card debt is the snowball method. With the debt snowball method, you pay off the card with the smallest balance first before moving on to the next largest one.

This method is a good choice if you can’t afford to make large monthly payments but want to proactively chip away at your debt. Once you pay off a card, you'll redirect the funds you were using for that payment to your next card balance. You'll continue to do this until you’ve tackled each debt.

Here’s how it looks in action, using the following credit card balances as an example:
 

  • Credit card 1: A $5,500 balance and an APR of 16%
  • Credit card 2: A $2,000 balance and an APR of 20%
  • Credit card 3: A $10,000 balance and an APR of 23%

 

Using the snowball method, you’d focus on the second card on this list first because it has the lowest balance ($2,000). Once cleared, you’d move on to the next highest card balance ($5,500) before addressing the third card with a $10,000 balance. 

Remember to make minimum payments on all other cards in the meantime; missing any minimum payment can hurt your credit score.

 

What is the debt avalanche method?

Attacking debt using the debt avalanche method involves paying off the account with the highest interest rate first, regardless of the balance. It can take a while to make progress on —especially if the balance on that card is excessive—but you’ll save money on interest in the long run. 

The avalanche method may be a better strategy for you if you can confidently afford a bigger payment and want to pay less in interest while you work to become debt-free. 

Here’s how debt avalanche looks in action, using the same credit card balances from above as an example:
 

  • Credit card 1: A $5,500 balance and an APR of 16%
  • Credit card 2: A $2,000 balance and an APR of 20%
  • Credit card 3: A $10,000 balance and an APR of 23%

 

Using the avalanche method, you’d tackle the third card first because it has the highest APR (23%). You’d focus on the second card next—APR of 20%—even though it has a lower balance, before moving on to the first card with the lowest APR. 

Again, it’s important to focus on making every payment on time to protect your credit score and avoid tacking on additional late fees. It can take a while to knock out the first debt, so patience and consistency is key.

 

How can debt consolidation help? 

Consolidating personal credit card debt FAQs

Consolidating personal credit card debt can simplify your finances by combining multiple debts into a single monthly payment with more manageable interest rates. In the long run, this can save you from spending more money than you anticipated or previously agreed to on in-terest payments in the future.

Personal debt consolidation can impact your credit score differently depending on the method chosen. For example, applying for a new loan or credit card for consolidation may result in a temporary dip in your credit score due to inquiries, changes in credit utilization, and your his-tory using credit-based financial products. However, making timely payments on the consoli-dated debt can positively affect your credit score by demonstrating responsible financial man-agement.**

Yes, personal debt consolidation can be applied to various types of debt, including personal loans, medical bills, and student loans, in addition to credit card debt. Consolidating multiple debts into a single payment can streamline your repayment process and make it easier to man-age your finances overall.

With highly specialized financing options for accomplished professionals, BHG Financial offers personal loans up to $200K1 to use as you need them. With repayment terms that last up to 10 years,1,2 you can fully bring your financial plan to action by consolidating your personal debts into a simple and affordable monthly payment to help you achieve financial peace of mind sooner rather than later.

Our payment estimator can help you see your personalized estimate quickly, and our dedicated concierge service team can serve your needs every step of the way.

 

Debt consolidation involves combining multiple credit card debts into one new account or loan and using it to pay off your existing debts. In many cases, consolidation can save you money because the new product may come with a lower interest rate than the ones attached to your cards. Consolidating debt also simplifies the repayment process because you only need to manage one monthly payment.

Some of the most effective credit card consolidation strategies include using a debt consolidation loan or a balance transfer credit card. The best way to pay off credit card debt will depend on the amount of debt you have, your credit history, and your income level.

If you have a significant amount of high-interest debt and a respectable credit score, a lower-rate personal loan for debt consolidation can be a viable option. Debt consolidation loans, like the ones offered by BHG Financial, have flexible repayment terms1 that help keep your monthly payments low.

 

Do balance transfers help pay off debt faster?

Transferring your balance from one credit card to another can help you pay your debt faster, as long as the new card comes with a lower rate. If you transfer your balances to a new card with a lower APR, you can allocate a greater portion of your future payments to paying down the principal instead of the interest.

That said, there are a few things to know about the timing of balance transfer credit cards:

  • You can apply for a balance transfer card in a matter of minutes, but the actual transfer can take anywhere from a few days to several weeks, depending on the credit card company. During that time, you’ll still have to make any payments you owe to your original card company.
  • Make sure you understand how long the introductory rate lasts, whether there’s a transfer fee, and what the regular rate will be after the promotional period. Introductory rates typically run for a period of six to 18 months, and if you can’t pay off your balance in full, the new rate may be higher than the rate on your old card. 

If you worry it may take longer than the intro period to pay off your debt, consider transferring your balance to a debt consolidation loan. BHG offers fixed, affordable payments with terms up to 10 years.1,2 Plus, dedicated loan specialists provide a concierge loan experience, guiding you through the loan process. 

 

 

Balance transfer vs personal loan chart


Source: Bankrate, Investopedia - Accessed on 3/14/25
1 Terms subject to credit approval upon completion of an application. Loan sizes, interest rates, and loan terms vary based on the applicant's credit profile.

 

How to pay off credit card debt FAQ

 

Should I pay off my credit card debt or save first?

It usually makes sense to pay off your debts before saving money, especially if you have high-interest debt. This is because the high interest rates on your accounts will often cost more than the money you can save. For this reason, any money you can afford to save is better allocated to paying off your high-interest debt so that it doesn’t continue to compound. 

 

How can negotiating with creditors reduce my debt?

If card issuers are willing to consider negotiating your credit card debt, you may be able to set up a payment plan, pay off the cards for less than what you owe, or agree to a forbearance. However, there are definite drawbacks to negotiation, as these solutions negatively impact your credit score.

 

Can I pay off credit card debt without hurting my credit score?

Absolutely! Any moves you make to pay your monthly balances on time can help build a solid payment history and, in turn, improve your credit score. Plus, reducing your credit card balances will lower your credit utilization ratio.

 

Are debt relief programs worth it?

Debt relief (debt settlement) programs offered by for-profit companies should be viewed as a last resort, and only after you’ve exhausted options for consolidation. Debt relief companies can fast-track getting out of debt, but they often charge high upfront fees, and the process could hurt your credit score. Watch for scams and make sure you understand the potential fees before handing over your finances to a debt relief company.

 

What if I can't afford minimum payments?

Many creditors are willing to work with you if you cannot afford to pay the monthly minimum payment. Call the company as soon as possible to see what you can work out. If getting a debt consolidation loan isn’t an option for securing a lower minimum payment, you can contact a credit counseling agency, which will help you organize a debt management plan to pay down your debts. Debt relief programs could be considered as a last resort, as they come with drawbacks and can charge exorbitant upfront fees.

 

How BHG can help you pay off debt faster

At BHG Financial, we believe financing should fit seamlessly into your life and goals. That’s why we offer personal loans tailored to your needs, with amounts up to $200,0001 and flexible terms of up to 10 years.1,2 Consolidate your high-interest debt with a BHG loan designed to help you move forward confidently. 
 
Plus, you’ll enjoy dedicated, U.S.-based concierge service that works around your schedule—because your time is valuable. Ready to see what’s possible? Use our quick and easy payment estimator to get your personalized loan estimate in just seconds.