Finance 101

Installment Loan Refinancing

March 20, 2024

Installment loans, also known as personal loans, are a common type of loan. These loans allow a borrower to get a lump sum of money upfront and pay it back over time. Installment loans can also help borrowers with on-time payments improve their credit, which can make them an appealing option for people with less-than-perfect credit.

Refinancing an installment loan just means to finance it again. In the case of an installment loan, it means taking out a new loan to pay off the original loan. There are advantages to doing this.

Read on to learn more about installment/personal loan refinancing, or "refi."


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What is installment loan refinancing?

When refinancing an installment or personal loan, the existing loan is replaced with a new one, either from the same lender or a new lender.

Refinancing an installment loan is usually done to:

  • Get a better APR or interest rate with a new loan*
  • Pay less over the life of the loan, as with a shorter term
  • Get more time to repay the loan
  • Find better terms, like fewer fees or no early payoff penalty

The funds from the new loan are then used to pay off the old loan. Sometimes you are responsible for making this payment, and sometimes the new lender transfers funds to the previous lender as part of the refinance. Make sure you know if you are responsible for this.  Paying off the old loan may also improve a borrower’s credit.

Once payment to the previous lender is complete, you start making payments on the new refinanced loan at the new monthly payment with the new rates and terms. 

How to refinance a personal loan?

How does loan refinancing work?  Refinance offers are typically made to certain customers only, like those who have never made a late payment and meet other criteria. 

At Check `n Go, we notify eligible customers via an email, mailer or phone call.

If you are thinking about refinancing a personal loan, where should you begin?

Consider whether refinancing is the right solution. It’s helpful to use an installment loan calculator and estimate how much refinancing will cost (including any fees, like early payoff penalties or origination fees for a new loan). Then compare how much refinancing would cost vs. what it would gain you to see if refinancing is worth it.

Check your credit score. Knowing your score will help you estimate how much refinancing will cost (including any fees, like early payoff penalties or origination fees for the new loan). If your credit score has improved since you took your original loan, you may be able to get better interest rates or terms for a refinance.

Shop around. With your credit score in hand and a sense of what you can afford, you can shop around for different lenders. Check `n Go is one option. Our loans offer flexible terms and are available to many borrowers with credit challenges. You may want to compare our rates and terms with a bank, online lender, or a credit union. You can also search “installment loan online.” Refinance rates can vary widely.

Once you’ve narrowed down the options, you’ll want to get pre-qualified so you can compare real offers and you make your decision. When you pre-qualify the lender will do a “soft” credit inquiry, which shouldn’t affect your credit score. An installment loan calculator may be helpful as you compare options. Be sure to consider the loan’s APR, fees, the monthly payment, the amount you can borrow, and repayment terms.

Apply for the loan. Once you’ve chosen a lender you’ll complete a formal application for the loan. The lender will conduct a “hard” credit check, which usually triggers a temporary drop in your credit score. You may need to provide documentation, like tax returns, pay stubs, and the like.

If you refinance a loan at Check `n Go, we will validate the information you provided for your previous loan.

Get a decision. Depending on the lender, it may take some time to get a decision on your loan application.  This is particularly true if you are changing lenders for the new refinanced loan.  If you aren’t approved, you can choose to apply with a different lender.  Just keep in mind that your credit score will be impacted by each completed application.

At Check `n Go, we provide your approval status and amount instantly during the application process, whether you apply in-person, online, or over the phone.  You are not required to accept the refinancing offer; it takes effect only when you sign the loan offer.

Get your money. Once your refinancing lender approves the loan, they may transfer funds directly to your bank account, mail you a paper check or pay your previous lender directly.

At Check `n Go, you can get your funds as soon as the next business day.  Funds are always transferred directly to the account you provide us.

Pay off the original loan. If you’ve refinanced with a new lender, be sure to call your original lender to make sure the initial loan is paid off. Request documentation of the loan payoff in writing – the prior lender can mail or email you a statement.

At Check `n Go, we complete your previous loan as part of your refinancing process.

Begin new loan payments. Once your loan is approved, your paperwork is signed, and the old loan is paid off, you simply begin making the loan payments for the new loan. If you went with a different lender for the refinance, be sure all payments go to the new lender.  You’ll need to discontinue any auto-payments that went to the original lender.

Types of Loans to Refinance

Mortgage, student, auto and installment/personal loans can be eligible for refinancing.  Check with your lender to find out if your specific loan can be refinanced.

At Check `n Go, only installment loans are eligible for refinancing.

What is a reloan?

At Check `n Go, a reloan is different from refinancing. Reloans are offers for new loans made to recent inactive customers who do not have an active loan with us.

The Pros of Refinancing Installment Loans

There are good reasons to consider a refinance loan, such as:

  • Lower interest rates. Depending on when you are borrowing, it may be possible to find an interest rate better than the one you got with your existing loan. This shouldn’t be the only consideration, but it can be a great reason to look into refinancing.
  • Different terms. If you need longer to pay off your loan or you’re struggling to make your current payments, it’s a good time to consider refinancing.
  • Fixed interest rates. If your current loan has a variable interest rate and rates are on the increase, locking in a fixed interest rate is a great reason to consider refinancing.
  • Possible credit improvement. When you pay off your initial loan as part of refinancing, it can sometimes boost your credit score. By itself, this isn’t a reason to refinance, but it could be a positive side benefit.

With Check `n Go, you may also be able to increase the loan amount when you refinance. If you need additional funds, this may be a good option.

The Negatives of Refinancing Installment Loans

It’s important to consider whether refinancing is a good fit for your situation. These factors should be part of your decision:

  • Additional fees. When refinancing, you are taking out a new loan.  This usually means there are “origination fees,” which typically run between 0.5% and 1% of the loan amount. (Check ‘n Go does not charge origination feels on any of its loans.)
  • If your original loan terms include early payoff fees, you may be responsible for these charges too. It’s important to factor in these fees as you decide if refinancing is a good idea for you.
  • Interest. Refinancing can help you get a lower payment if you accept a longer term. Just remember, you may pay more in interest over the life of a longer loan.
  • Qualifications. Depending on your financial situation, it could be difficult to qualify for a new loan.

Refinancing: Key Takeaways

It’s important to evaluate whether refinancing is right for you and your unique situation. Be sure to think about your needs, prequalify, and compare to help you make a good decision.

Editorial Policy: The information contained in Check `n Go’s Finance Academy Learning Center is for educational purposes only and is not legal advice. You should consult your own attorney or seek specific advice from a legal professional regarding any legal issues. Check `n Go does not act as a credit counseling, repair service, or debt consolidation service in providing this content. Please understand that Check `n Go policies change over time. Blog posts reflect Check `n Go policy at the time of writing. While maintained for your information, archived posts may not reflect current Check `n Go policy.

The information contained in our blog posts are the author’s own opinions, not those of Check `n Go or any other company. Any pros and cons are developed by our editorial team based on independent research. Some of the products, services, and offers on this page may not be available from Check `n Go. In Texas only: Check `n Go does not act as a credit services organization in providing this content.