If your loan has a very high interest rate or the conditions are becoming too hard for you to meet, you always have the option of loan refinance. Trust us; it can take a lot of the burden off your shoulders.
Loan refinance simply means that you are getting a better loan in lieu of your older more unfavorable one. You can shift towards a better deal with the loan refinance on all kinds of debts, like auto loans, home loans, student debt, and more. Here’s how it can benefit you.Who is Tripoint Lending?
Who is Tripoint Lending?
The fine print on the TriPoint Lending website says TriPoint Lending is an alias of a company called Alleviate Financial, LLC in California. And guess what, Alleviate Financial is a debt relief/debt settlement group.
Loan Refinancing Defined
When you refinance, you are replacing your old loan with a new one. You will become free of debt on your previous loan. Instead, you will be liable for the new loan which should have better terms and conditions to make repayments easier for you.
The details of the new debt depend on your new lender. Here is how the process typically works.
- You are interested in improving the conditions of your existing loan
- You locate a lender offering better terms and conditions and you now want to change your debt to this loan
- If your application is approved, the new loan will pay off your previous debt entirely
- You now have to make repayments till you pay off the liability on your new refinanced loans
Refinancing can incur both time and cost. That is why you should make your choice wisely. You should check scrupulously for any important features that may be missing in the new loan. Great care and caution are necessary; you do not want to end up with a new loan that is much worse than the original one.
If you make the right choice for refinancing your current loan, you may stand to gain the benefits as mentioned below.
But first, you must study the terms and conditions of the new loan. If you stand to gain one or more of the following benefits, you may consider applying for refinance.
- Cost Savings
The most common motivation for refinancing has to be the lower cost of the new loan. Refinancing makes sense if the new loan has a lower interest rate than your existing loan. The savings are even more substantial for loans with a large principal amount and lengthy payment period.
- Reduced Payments
With a refinancing, you may have to pay a lower amount each month on the new loan. This is a great advantage since your cash management will be simplified. You will have to set aside a smaller amount by way of repayment each month. There will be more monthly disposable income for you which you can spend on other important expenses.
One key benefit of loan refinance is that it restarts the clock. You may be allowed to pay back the loan over a longer period of time due to which you will be making smaller monthly repayments.
- Shortened Repayment Period
There may be reasons for shortening the period over which you are allowed to repay the loan. Reducing the time duration of loans is often done so that you may have to pay less interest over the long term.
When you reduce the repayment period, you often get to enjoy a lower interest rate. So if you reduce a 30-year mortgage to just 15 years, you will likely benefit from a reduced rate of interest.
Another major benefit is that you are discharging your dues in a shorter time period. You can afford to be carefree and relaxed once your responsibility ends quickly. A longer repayment period may translate to a longer headache.
- Debt Consolidation
Don’t let the fancy parlance worry you. Debt consolidation simply means to gather all your outstanding loans into one single loan. The benefit is usually a lower interest rate.
Another major benefit of consolidated debt is that you will not have to make multiple payments for several different loans. You can pay off all your dues just once every month.
- Better Loan Type
If your loan is the variable-rate type then you may stand to gain from a fixed interest rate.
The fixed interest rate is lucrative particularly when the current rate is low but is forecasted to increase in the near future. You will, therefore, have protection against high interest rates in the future.
- Paying off Matured Debts
There are certain kinds of loans such as balloon loans that you must pay by the specified deadline. However, you may be short on funds and therefore unable to pay the lump sum amount.
In such a case, it will almost certainly be better for you to refinance your loan. With loan refinance funds will be available to you for paying off the due loan.
In other words, you are using one loan to repay another loan in full. Of course, you will then have to pay the entire outstanding amount of your new loan. However, this should be much easier since the terms and conditions will be more favorable for you.
For example, certain loans have a short time duration for full payment. If you feel that there is too little time to repay, you can apply for a new loan that permits a longer repayment period. It will be easier for you to get this kind of refinance for your business if you are able to show in your record that you make timely and regular debt payments.
How to Refinance Loans
Here are the steps that you must take to refinance your loan.
- Calculate the Sum That You Need
The amount that you need depends on your outstanding liabilities.
- Check Your Credit Score
With a higher credit score, you have a better chance of getting a loan with a lower interest rate. Find out the lowest possible rate that you can get with your credit rating, and then compare the new rate with the existing rate.
Apply for the new loan only if there is a significant difference between the two rates.
- Search Lenders
You can search for different lenders online and even banks for loans with better terms and conditions. Keep track of the repayment period, monthly payment amount, interest rate and other key factors while your search is on.
You will also have to calculate the total interest you will be paying over the full duration of the loan. To find out what interest rate they are willing to offer, you may have to reach out to lenders.
- Apply for Refinance
If the new loan, along with its interest rate, total interest, and payment duration is suitable for you, then you can go ahead and apply for refinancing with this lender.
