Refinance Personal Loan? Here's How to Save Big (2026)

Finding yourself burdened by a personal loan with high interest rates or unfavourable terms can feel overwhelming. You might wonder, "Can I refinance my personal loan to ease my financial load?" The good news is, refinancing could be your ticket to lower payments and better conditions. Understanding how to navigate this process is crucial, and we're here to guide you through it.

Understanding Refinancing a Personal Loan

Refinancing a personal loan involves taking out a new loan to pay off your existing one. The goal is to secure more favourable terms, whether that's a lower interest rate, reduced monthly payments, or a shorter loan term. By refinancing, you might also consolidate multiple debts into one manageable payment.

While refinancing can offer significant savings, it's important to understand the implications. Factors like interest rates, loan terms, and fees can impact whether refinancing is the right choice for you.

Current Rates and Options in 2026

In 2026, the Australian financial landscape presents a variety of options for refinancing personal loans. Interest rates for personal loans typically range from 6.49% to 12%, depending on your credit score, loan amount, and term length. Lenders might also charge fees for processing, so it's crucial to compare these when considering refinancing.

Here's a quick overview of some typical options available:

Esteb and Co, with access to over 83 lenders, can help you navigate these options to find a loan that suits your needs.

Steps to Successfully Refinance Your Personal Loan

Refinancing a personal loan can be a straightforward process if you follow these steps:

1. Evaluate Your Current Loan: Understand your existing loan terms, interest rate, and any prepayment penalties.
2. Check Your Credit Score: A higher credit score can qualify you for better rates. Obtain a free copy of your credit report to ensure accuracy.
3. Research Lenders: Compare interest rates, fees, and terms from different lenders. Consider both traditional banks and online lenders.
4. Calculate Potential Savings: Use a loan calculator to estimate your monthly payments and overall interest savings with a new loan.
5. Submit Your Application: Once you've chosen a lender, gather necessary documents (e.g., proof of income, ID, loan statements) and submit your application.
6. Review the Offer: Carefully review the loan offer for fees, APR, and terms. Ensure the new loan will indeed save you money.
7. Close on the New Loan: Accept the loan terms and use the funds to pay off your existing loan. Set up automatic payments to avoid missing due dates.

Expert Tips and Considerations

Here are some expert tips to consider before pursuing refinancing:

• Assess the Cost-Benefit: Ensure the cost of refinancing doesn't outweigh the benefits. Consider application fees, closing costs, and any penalties.
• Watch for Variable Rates: Some loans offer lower initial rates that can increase over time. Make sure you understand all aspects of the loan terms.
• Consider Loan Features: Flexibility features such as redraw facilities or repayment holidays can be advantageous depending on your circumstances.
• Seek Professional Advice: Consulting with a mortgage broker like Esteb and Co can provide insights tailored to your situation, especially with access to a wide range of lenders.

Frequently Asked Questions

• Is it possible to refinance a personal loan with bad credit?
  Yes, though options may be limited and rates higher. A broker can help find suitable lenders.
• How often can I refinance my personal loan?
  There’s no set limit, but frequent refinancing may not be beneficial due to fees and potential credit impact.
• What credit score is needed to refinance a personal loan?
  Typically, a score of 620 or higher is favourable, but options exist for lower scores.
• Can I consolidate multiple personal loans into one?
  Yes, refinancing can help consolidate multiple loans into a single payment, simplifying management.
• Will refinancing my personal loan affect my credit score?
  Initially, a hard inquiry may lower your score slightly, but successful refinancing can improve it over time through reduced debt levels.
• Are there tax implications when refinancing a personal loan?
  Generally, personal loan interest isn’t tax-deductible, so refinancing shouldn’t affect taxes.
• Can I refinance if I’ve missed payments on my current loan?
  It may be challenging, but not impossible. Lenders may be more cautious, resulting in higher rates.