Loan Refinancing without Collateral (Refinansiering Uten Sikkerhet)?

4 min

If you have a loan that is too risky and expensive to pay off, you might need to consider refinancing. Certain things about you might have changed since you borrowed from the lender, and there are certain ways you can refinance to improve your loan. But what if your existing credit is an unsecured loan, can you refinance it?

Refinancing an unsecured loan is the same as doing so without collateral. This means that you take a new loan without collateral to pay off your existing expensive debts. You wouldn’t need to provide an asset of value to do so.

It is very possible to refinance without collateral. Some refinancing processes are for unsecured loans. You take up a new credit with better interest rates and terms to pay off an existing one. The detail of the process involved in this financial decision typically follows these patterns:

  • You have a bad unsecured debt that needs to improve
  • You shop around for lenders  that can offer a loan that has better rates and terms, then you apply for it.
  • The new credit pays off your existing credit.
  • You start making new monthly payments on the new loan

To benefit from this, you need to refinance at the right time with the right lender. When can you do this and what will you benefit from making this decision? Let’s discuss this.

When Should You Refinance

The major reason why you decide to do so is that you want to save money, however, there are other motivating factors that determine whether you should refinance or not. Here are some of them:

You Have an Improved Credit Score

The reason your existing unsecured loan comes with a high interest is because of your poor credit score. It could be that you were not financially capable of getting a better loan or you were already in debt so you had no option to borrow money with high-interest rates. Now, you have a better job and have improved your credit score, you can refinance your old debt to a lower interest rate and term. If you would like to know more about the steps to take in doing so, read here.

You Want a Lower Monthly Payments

It might not be easy to make your monthly payments on your unsecured loan. If that is the case, then refinancing will help you extend your repayment duration. The longer the duration, the lower the monthly payment.

You Want to Delete or Add a Co-applicant

You can decide to refinance if you wish to delete or add a co-applicant on your existing loan. When you take a new credit, you will have to follow a new term that allows you to delete or add a co-applicant.

You Got a Better Deal

You can’t stay with a lender based on loyalty if you find another lender with better offers. If you are sure you have found a better loan, make sure you deduce if it is worth it. Compare the new deal with your existing credit. You can use a refinancing calculator for this. Consider the feature of each credit to ensure that the new one is your best choice. If you are convinced, you can refinance.

You Need a Property Renovation or Expansion

If your property has a lot of equity, it is possible to reinvest the equity on your home to carry out some renovation projects or expand the home. You can do this with something called cash-out refinance.

Let’s explain what this means. Imagine you bought a home for $250,000 some years ago and now, its value has increased to $300,000. When you got the mortgage for the property, you had to make a payment of $50,000 and you also paid $50,000 for the principal. This means that your mortgage debt is $150,000 and the property is twice in equity of that amount.

If your renovation cost is $25,000, you can refinance the mortgage for $175,000. The $150,000 debt you owe will be paid off, then the extra $25,000 would be given to you for the renovations. Now, you will have a new debt of $175,000 to pay off.

Depending on the lender you choose, you can lengthen the duration of the loan and reduce the monthly payments.

Benefits of Refinancing Without Collateral

The following are some of the benefits:

It Helps You Save Money

The major reason why many refinance today is to save money on interest rates. For this to happen, you will have to take a new credit with a better rate that is quite lower than your existing interest. Lowering this rate will help you save money.

It Helps Lower Your Monthly Payment and Shortens its Duration

A lower monthly fee results in better cash flow management and more funds for other expenses. When you refinance, you make your debt balance smaller than the existing one. This will give you more time to repay and your monthly payment can be reduced.

You can also shorten the terms of the loan to a shorter duration. Maybe you had a loan with a longer duration before but now, you are financially well off to cover your debt on time. In this situation, you can get a new credit with shorter terms to replace the one with long-term.

It Helps You Consolidate Debts

If you have different unsecured loan debts, it is wise to consider consolidating them into a single payment. Since you can refinance unsecured credit (without collateral), it is possible to get a loan that will cover all this debt in a single payment. If you would like to know more about this, click here for refinansiering uten sikkerhet (refinancing without collateral) review.

It Helps You Change Your Interest Rate Type

If you are currently servicing a variable interest rate loan, you might want to take a credit with a fixed Interest rate. Having one with fixed interest makes it easy for you to pay off debts on time.

It Helps to Pay off Debt that is Due

Some unsecured loans have specific repayment dates. If you don’t have the funds to make a single large payment, you can decide to refinance to extend the repayment duration so you have more time to pay the debt.


Before you decide to refinance, it is wise to calculate the costs. That way, you can easily find a lender that offers the best rates on refinancing without collateral.

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