Paying off your debts on time and within your budget is key to effectively managing your finances. If you find that your loan payments are difficult to manage, you could consider refinancing your loans to give you a positive cash flow and save on interest costs.
Refinancing your loans achieves different objectives, including lowering interest rates, increasing payment amounts, stretching out payment schedules and more.
Reasons to refinance your loan
Some of the most popular reasons to refinance a loan are:
- Securing a new, lower interest rate. If the interest rate on your personal loan, for example, was high at the time you applied for it, you may be paying more than is necessary. In the event interest rates have dropped, you may be able to refinance your loan and take advantage of a lower rate, which will in turn lower your payments and save you money over the term of the loan. Also, by consolidating your debt in this manner you may qualify for an even lower interest rate.
- Paying off your loan faster. This can be a smart move if you've recently received a raise, finished paying off other debt, or come into some money. You can refinance your loan and obtain a new payment schedule, which will allow you to pay the loan off quicker which saves you money in interest over the long run.
- Stretching payments out. On the other hand, you may find your finances getting tighter and actually need to reduce your monthly financial obligations. By refinancing the remaining loan, you can lower your monthly payments by selecting a longer term. Bear in mind this will cost you more in interest, but it will reduce the payment each month.
Refinance your loan with CIBC
If a loan refinance seems like a viable option for gaining control over your finances, contact CIBC to receive more information. Visit a CIBC local branch, or call a CIBC advisor at 1-866-525-8622 to start the process.