Can I refinance a personal loan to lower my monthly payment?
Yes. Refinancing replaces your existing loan with a new one - ideally at a lower rate, a longer term, or both. Extending the term reduces monthly payments but increases total interest paid. If your credit score has improved since the original loan, you may qualify for a lower rate that reduces both payment and total cost.
Context
When refinancing makes sense: Your credit score improved significantly (740+ vs 680 at origination can mean 3-5 percentage points better rate). Market rates dropped. Your income increased, making you a lower-risk borrower. You need to reduce the monthly payment for cash flow reasons (even if total interest increases).
Two types of refinance outcomes: Rate refinance: same term remaining, lower rate - both payment and total interest decrease. This is the ideal scenario. Term extension: same or similar rate, longer term - payment decreases but total interest increases. Example: $15,000 remaining at 14% APR with 24 months left = $721/month. Refinance to 48 months at 14% = $409/month. Payment drops $312/month but you pay an additional $2,800 in interest over the longer period.
What to watch for: Origination fees on the new loan: a 3%-6% origination fee on a $15,000 loan is $450-$900 upfront. Compare this against the interest savings to determine if the math works. Prepayment penalties on the existing loan: check if your current loan charges a fee for early payoff. Read your loan agreement or call your lender.
Where to refinance: Any personal loan lender will consider your application. You do not need to refinance with the same lender. LightStream, SoFi, Marcus, and Discover are frequently competitive. Run prequalification checks at multiple lenders before committing.
- Reviewed by
- Compliance Review
- Last reviewed
- June 15, 2026
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