How to Refinance a Personal Loan

Get the Existing Loan Position

1. Obtain the current loan records and an actual payout quote with the client’s authority.

Record the account balance and remaining term, together with the interest rate and repayment frequency. Collect the loan contract and latest statement, then identify ongoing fees and any early-payout charge. Note whether the rate is fixed or variable and whether an asset secures the debt.

The statement balance is not necessarily the amount needed to close the loan. A payout quote includes amounts still owing at closure, such as accrued interest and applicable fees. Record how long the quote remains valid and which payment method the outgoing lender requires.

For an unsecured NAB Personal Loan, the client can request a payout figure through secure messaging in NAB Internet Banking or the app. NAB’s payout and closure instructions say the figure includes outstanding fees and interest and is valid only for the day requested.

CommBank lets the client choose a payout date through the personal loan’s Manage menu, then select Pay out and close. Its loan-management instructions explain that the final payment must arrive by the selected payout date. An early repayment adjustment can apply to its unsecured fixed-rate personal loans and secured fixed-rate car loans.

If the old loan is secured, identify the asset and the lender’s release process before applying elsewhere. Replacing an unsecured loan with a secured loan changes the client’s risk: the new lender can enforce its security if the borrower defaults.

The first checkpoint is a complete existing-loan position. You need a valid payout amount, the cost of keeping the loan and a clear record of any security being released or replaced.

Compare the New Offer Over the Same Period

2. Compare the replacement over the existing loan’s remaining term before considering a longer repayment period.

Use the payout amount as the proposed borrowing requirement. Keep additional cash borrowing separate, so it does not distort the refinance comparison. Include application costs and ongoing fees, and identify any fee added to the new loan balance.

Calculate the remaining payments if the client keeps the old loan. Then calculate all payments on the replacement over the same remaining period, plus switching costs paid separately. A financed fee already affects the new loan’s repayments, so do not count it twice.

Moneysmart’s refinancing guidance links a useful refinance to lower overall cost, an affordable repayment and a clear debt end date. It also explains the added risk of using a home or car as security for previously unsecured debt.

Hypothetical Repayment Comparison

Assume the client owes $20,000 with 24 monthly payments left at 12% a year. A replacement charges 9% a year, with a $300 application fee paid upfront. Assume the payout equals $20,000, with no exit fee or ongoing fees, and no further borrowing.

The figures use monthly principal-and-interest repayments and constant rates. Totals use unrounded repayments, so multiplying the displayed monthly amount can differ by a few cents.

Option	Remaining term	Approximate monthly repayment	Total repayments	Separate upfront fee	Total future outlay
Keep existing loan at 12%	24 months	$941.47	$22,595.27	$0	$22,595.27
Refinance at 9%	24 months	$913.69	$21,928.68	$300	$22,228.68
Refinance at 9%	48 months	$497.70	$23,889.64	$300	$24,189.64

Over the same 24 months, the hypothetical refinance saves $366.59 after the upfront fee. Extending it to 48 months reduces the monthly payment much further but costs $1,594.37 more than keeping the original loan. The client also remains in debt for two extra years.

A smaller instalment can help a cash-flow problem, but record that trade-off separately from a saving. If affordability requires an extension, explain both the new end point and the extra total outlay. When the client is already struggling to pay, discuss the existing lender’s hardship options before treating another loan as the solution.

Use the personal loan calculator to compare repayment and interest figures on consistent assumptions. Replace estimates with the actual offer’s payment schedule and fees before recommending a refinance.

Apply and Coordinate Payout

3. Submit the chosen application with the evidence and payout instructions required by that lender.

Assemble identification and verified income records, together with living expenses and current liabilities. Include the existing loan statement and payout letter. Compare eligibility and available providers through the personal loan lenders guide, then use the selected lender’s requirements for the application itself.

Plenti’s application guide lists identification, address evidence and income records, plus expenses and liability statements. A complete evidence file does not guarantee approval. The new lender must still assess the application.

Confirm who pays the outgoing provider before the client accepts the contract. The settlement instructions must identify the creditor and payment reference, with a payout amount valid when funds arrive. Do not assume that money deposited into the client’s account automatically closes the original loan.

NOW Finance’s debt consolidation policy requires direct payment to the financier for that loan purpose. Its payout letter must identify the applicant and valid amount, with the financier’s payment details. NOW Finance uses its refinance purpose for an existing NOW Finance loan and its debt consolidation purpose for other debts.

For a NOW Finance application, review the credit team’s settlement conditions before generating the contract. Its settlement instructions require the broker to satisfy requested documents and enter the repayment account and payment frequency. Secured loans also require the relevant asset details.

Match the final contract’s disbursement to the payout letter. If settlement moves beyond the quote’s validity, obtain an updated amount and have any affected contract details corrected. Keep normal repayments funded until the outgoing lender confirms how settlement affects them.

If a payout fails, compare the payment receipt with the creditor’s verified instructions. Check the reference and arrival timing before arranging a correction with the lenders. A transfer receipt proves that a payment was sent, while the outgoing account confirms whether it cleared the debt.

Confirm Closure and New Repayments

4. Obtain the old lender’s confirmation and check that the new repayment arrangement works.

Inspect the outgoing account after the payout posts. Obtain a final statement showing a zero balance or written confirmation that the loan is paid in full. If the account remains available to redraw, request closure confirmation as well.

A remaining debit balance needs reconciliation against the payout quote and the payment received. Ask the outgoing lender to identify any accrued interest or fee and provide the amount needed to finish closure. If the account has a credit balance, arrange its refund through the lender’s process.

CommBank allows up to 10 days for closure after the final payment is processed. Payments from another bank or by BPAY can take an additional two business days to process. Treat those periods as CommBank’s process, not a deadline shared by all lenders.

Once payout and closure are confirmed, cancel obsolete regular transfers and direct debits as the lender instructs. NAB specifically says these payments do not stop automatically. Check for an overpayment or duplicate debit and resolve it with the outgoing lender.

For a secured loan, obtain evidence that the outgoing lender has released its security. The Personal Property Securities Register, or PPSR, explains that a secured party must discharge a registration when its interest ends. Follow up with the secured party if the registration still appears after release.

Check the new lender’s repayment amount and frequency against the accepted contract. Confirm the first payment timing, the nominated bank account and sufficient funds. After the first debit, verify that it reached the new loan and appears correctly in the client’s records.

Keep the cost comparison and accepted contract with the payout receipt, closure evidence and any security-release record. The refinance is complete when the old debt is paid and closed, any relevant security is released and the new repayment arrangement is operating.