Is it Time to Refinance Your Personal Loan?

You've heard of refinancing home loans but have you considered refinancing your personal loan? We discover three scenarios wherein which you would want to consider trading in your personal loan for another!

You have probably heard of refinancing a home - but few have heard of refinancing a personal loan. If you have an outstanding personal loan to settle - you might be wondering why anyone would ask you to take another loan to pay this off... why would you indeed?

However, there are very good reasons to trade in your current personal loan for a new one. Before we get into the reasons, let us explain a little what refinancing a personal loan means.

What Does it Mean to Refinance a Personal Loan?

Refinancing simply means, trading one debt obligation onto another debt, most of the time to a different bank or financing company and under new terms.

This move allows you to change the nitty-gritty details about your loan to something better suited for your financial situation.

Refinancing is a term often used when referring to swapping the mortgage on your home. Sometimes called remortgaging; it is the most common loan subjected to refinancing because of it's extended tenure and how much can change from the time you take the loan to the time you complete payments.

But in truth, you can refinance any loan you have if the move proves favourable to you. This is often done for credit cards but is commonly known as a balance transfer because of the nature of the debt.

Now that you have an idea what the term means - we get into the situations where a refinancing of a personal loan could do you good.

Your Current Personal Loan Interest Rate is Too High

As with mortgages, it is possible for your personal loan interest rate to be higher than other loans in the market. This ends up costing you more money in the long run.

Swapping for a low interest personal loan will certainly do your financial health a world of good and you will find yourself paying the loan off faster too.

To find a personal loan with a lower interest rate than what you currently have; pull out your loan contract and look up the rate. You can then compare it to the other loans in the market - all easily listed for you on our personal loan calculator page.

Before you swap, however, do check that your current loan does not have any early settlement penalties. You would not want to be subjected to more fees and risk losing the benefit of the swap.

You Cannot Afford the Repayments

Sometimes, we may find ourselves in a difficult financial predicament. Perhaps you were forced to take a lower paying job or have another big bill to contend with monthly.

Whatever the reason; you are no longer able to afford the amount you used to pay without issues. Whilst you can't completely wipe out your obligation to pay; you can take another loan for a longer period, lower interest rate and hence, smaller monthly instalments.

You Need Another Sum of Money ASAP

Life doesn't always happen the way we want it to and you may find yourself in need of emergency money. But what if you are still in the midst of paying off another loan from the past?

Whilst we don't condone taking on more debt than you can chew - if you are confident you can repay the sum back; refinancing your personal loan could give you the additional cash you need whilst consolidating this with your current loan so you won't have two payments to make.

This situation would require you to take a loan big enough to cover the sum of cash you need as well as the remaining balance of your old loan. Only then, will this work for you. To somewhat gauge if you will be allowed such a sum - calculate your current debt service ratio.

Pointers and Precautions

Now that you know why you may need to refinance your personal loan - there are still a few things you will have to factor into your plans before taking the leap.

It is universally advised that you:
1) Check for early settlement penalties. Ask your bank if this fee can be waived or if there is a time bar that you need to pass.
2) Do not take more loans than you can repay. More on point for the third situation - consider how much you can afford to pay and if you really need to take another loan before you commit to more debt.
3) Time your new application. When do you usually pay your bills? Take note of processing times and ask the bank if you can pay your new loan instalment around the time you make all your other payments. This helps you remember all the loans you need to repay.

If you've decided that a new personal loan is for you; check out our personal loan comparison page for the best personal loans in Malaysia. You can also apply for fast approval loans in Malaysia if you need money ASAP.


Agree or disagree with this post? Questions? You also have your word!

  • Heylee

    I have 2 personal loan
    1. RM16k settlement = RM12k
    2. RM27k settlement = RM23k
    Any suggestion to combine this 2 loan into 1?

    • RinggitPlus

      Hi Heylee,

      We are not qualified to give you exact financial advice, it would be wise to check with your banks and weigh the options before making the commitment.


    • visalini

      Im just 20 and would like to apply for personal loan. Any suggestions?

      • RinggitPlus

        Hi Visalini,

        Yes we can provide you with some great information.

        Here is the link to our personal loan page tools you may take advantage of.

        Thank you for your support.

      • mary

        I have loan with easy rhb, can I refinance it because now they put me in ctos/cris because I did pay late. how can I clean my name because now I pay every month without fail but the interested become more higher and its really sucks.

        • RinggitPlus

          Hi Mary,

          All banks have different procedures and regulations for approval. Considering there used to be lots of late payments and a CTOS remark, it could prove rather difficult to get one.

          If you have had a court summon and it is listed in CTOS, you could probably get it cleared once the bank releases you and is no longer pursuing the case.

          Speak to your bank about this and see if you are able to clear your name from CTOS, then you could try getting another loan.

          Thank you.

        • David


          I have loans with citibank. How do i get another loan with low interest to settle the citibank personal loan as the citibank has higher interest rate. Thanks.

        • Rodney

          Hi I don't have anything to pay no loan nothing but I want to apply for personal loan is it possible

          • RinggitPlus

            Hi Rodney,

            You can apply, but it would definitely be easier if you have a credit record. If you've been using a credit card and paying it judiciously that would help a lot.
            Check out our comparisons page for a list of the best personal loans offered in Malaysia:
            Hope this helps!

          • Icha

            I have two loans from the same bank which is counted 1st account and 2nd it possible for me if I apply with your bank to settle these loans and make it into one?

            • RinggitPlus

              Hi Icha,

              We don't have a bank... but if you're asking if applying for a loan with another bank to help settle your current debts, then yes you can do that. Remember however that the interest rate on the new loan should be less than the current debts otherwise this won't work.
              Also keep in mind that since you're already servicing two loans, you might have a lower chance of your loan application being approved. But there's no harm in trying. Hope this helps!

            • Abdul Jalil bin Mohamed Shariff

              Hi,have 1 loan ni Cimb RM 10.000

              • Sriharan

                Hi..i"m 19 yrs only..currently working in a company. Am i eligable.for personal loan application?

                • RinggitPlus

                  Hi, Sriharan

                  This depends on the banks. Some banks may be open for your application but you need to provide the following documents: Salary slips, EPF statements, Credit report etc. So, you need to check with the respective banks on their condition.

                  Thanks for the question and we hope this help.

                • Hi, i want to consolidate my credit card debt and another personal loan under a mortage loan by refinancing my house. Which bank offers this kind of package ?

                  • RinggitPlus


                    You can consider the standard chartered CashOne loan consolidation plan or any plans that is on offer here

                    Thanks for the question and we hope this helps.