There is talk of refinancing a personal payday loan to understand the procedure by which you apply for a loan with the sole aim of extinguishing a series of other personal payday loans that have been started in the past and that now could weigh too much on your monthly budget.

What is loan refinancing and what are its advantages?

What is loan refinancing and what are its advantages?

The refinancing procedure, also known as debt consolidation, gives the advantage of being able to pay less money every month than the sum of the installments that were previously paid.

You can, therefore, take advantage of a lower monthly cost to be incurred for the installments of the loan, with a certain benefit for your budget that can be used in other ways.

How to apply for ongoing loan refinancing

How to apply for ongoing loan refinancing

Loan refinancing, or debt consolidation, can be requested directly from a finance company or bank, specifying that the target for which the sum of money is being borrowed is to pay off previous loans.

Depending on the financial company where you ask for this sum of money, the repayment of the other loans can be made by the finance company or it will have to be done directly by you.

In the first case, it is the financial company that will take care of getting in touch with your “old” financial company, agreeing on how to pay off the debt. In the second case, you will be credited with the amount you requested on the current account and you will have to pay off your previous debts. Of the two solutions, for obvious reasons of practicality, the first is undoubtedly the most practiced ever.

Features and benefits of debt refinancing

Since the duration of the new loan will be longer than that of the loans previously taken out. Consequently, at the end of the repayment of the new loan, the total cost that you will have paid for the interest will undoubtedly be higher than what you would have incurred if you had continued with the old loans, but you must consider the advantage of being able to pay a lower monthly installment.

Who is it granted to?


As with any type of loan, the bank carefully weighs the risks and benefits of granting a new loan. Specifically, the creditworthiness of the applicant and his level of income are assessed.

In the first case, the lender goes to the risk centers to find reports as bad payers that may concern the applicant and we can certainly say that not having had debt problems in the past helps considerably.

In the second case, however, each bank applies its own rules, but in general, we can say that the lower the ratio between the monthly installment and the applicant’s monthly income, the more likely there are to be granted the loan.

To give an example, other things being equal, the bank will more easily grant a loan to those who have a monthly income of 2,000 dollars and will have to repay 200 a month (the amount of the installment is 10% of the salary), than to those who have a monthly income of 600 dollars and will have to pay 200 a month (the installment amount, in this case, is 33% of the salary).