Refinance an Existing Loan
Borrowers who do not have money to pay off their current existing loan can be refinanced. This procedure involves the registration of a new loan in order to close the previous ones. Refinancing service is available to payday lenders’ clients. It can be used by regular borrowers, as well as those who received money from third-party financial institutions.
Why are loans refinanced?
It is beneficial to resort to on-lending or refinancing when the borrower needs:
- reduce overpayment (reduce rate);
- reduce debt burden;
- repay several open payday loans or combine them into one.
MFIs do not deal with all debts. The on-lending service cannot be used for loans from individuals or pawnshops, as well as for credit card debts. To pay off such obligations, you can apply for a new short-term loan and then pay off the debts.
Taking advantage of refinancing, an MFI client can count on more favorable terms of service. The rate is reduced or the term of the loan is increased. The borrower gets the opportunity to repay debts without spoiling credit history (credit score).
Refinancing loans in MFIs allows you to:
- combine all active loans into one;
- repay overdue loans;
- keep or improve your credit score;
- reduce rate;
- reduce the size of payments;
- extend loan term.
Refinancing terms and procedure
The on-lending program can be used by citizens of the United States who have permanent registration, a valid ID and income (unofficial is allowed). The agreement is signed for a period of 1 to 5 years.
The borrower must leave an application for refinancing on the website or in person when visiting the MFI. After completing and submitting the application, you should wait for the preliminary results of the assessment. If the company agrees to execute the agreement, the client needs to visit a company and discuss the terms of refinancing.
Some MFIs do not insist on a face-to-face meeting and offer to arrange everything online. After the signing of the refinancing agreement, the MFI repays the existing loans by transferring funds to the accounts of other companies. The borrower undertakes to fulfill the new loan obligations to the MFI that provided the refinancing service.
When is refusal possible?
MFIs reject applications from clients who meet the following criteria:
- low income;
- a large number of delinquencies on past loans;
- high debt load;
- there are debts to the budget;
- you have an outstanding criminal record.
The client is evaluated according to numerous parameters, so the chances of getting approval are very high. To increase the likelihood of a positive decision, you can use extra guarantees of solvency. For example, a surety or a pledge.