Finance Glossary
Refinancing
The process of replacing an existing loan with a new loan — often to secure a lower interest rate, extend the loan term to reduce monthly payments, or to release equity. Refinancing can reduce costs but extending a loan term may increase the total amount repayable even if monthly payments fall. Always compare the total cost, not just the monthly payment.
Example
A borrower refinances a £5,000 loan from 39.9% APR to 24.9% APR, saving hundreds of pounds in interest over the remaining term.
Related terms
Debt Consolidation
The process of combining multiple debts into a single loan, …
Interest Rate
The percentage of the loan principal charged by a lender for…
Loan Term
The agreed length of time over which a loan must be fully re…
Total Amount Repayable
The complete sum you will pay back over the life of a loan, …
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