Refinance Your Loans: Is 2025 the Right Time to Save Money?

If you’re looking to save money in 2025—and who isn’t?—refinancing your loans could be a smart option. Read on for a quick rundown of what refinancing means, who is eligible, and how it can help you save money over the long term. 

The Basics of Refinancing 

Refinancing means taking out a new loan and using it to pay off your existing loan. Why replace one loan with another? The point of refinancing is that your new loan will offer better terms or a lower interest rate. Refinancing can help borrowers to lower their monthly payment, reduce or lengthen the time frame of their loan, or pay less interest overall.  

Most Loans Can Be Refinanced 

Almost every type of loan can be refinanced. Harvard FCU, for example, offers refinancing options on auto loans, personal loans, education loans and home loans. Even credit card debt can be refinanced, although this is more typically known as a balance transfer: in which the borrower will pay off credit card debt with a new card. If you’re interested in a balance transfer, look for a card that offers 0% intro APR and consider speaking to a debt expert about how to get any high-interest debt paid off as soon as possible.  

How to Save Money 

If you currently have a higher credit score than when you took out the original loan, you may be able to get a better interest rate on a refinanced loan. Similarly, mortgage rates tend to rise and fall depending on the Federal Reserve—so if federal rates are lower today, you may be able to secure a loan with less interest. On the other hand, some borrowers don’t mind paying more over the long run if it means lower monthly payments now. A refinanced loan could also extend the length of your loan to lower monthly bills. Just remember that a longer loan usually means more interest and a higher cost overall.  

Ask About Extras  

Often, borrowers who are looking to refinance can take advantage of special offers and benefits from lenders. Harvard FCU offers no payment for sixty days to members who are approved for auto loan refinancing, plus discounts for auto-pay and on hybrid or electric vehicles. With Harvard FCU’s education refinance loan, borrowers get a range of loan term options and an interest rate reduction with a qualifying relationship. 

Your Eligibility Depends on Your Credit Score  

As with any type of loan, your eligibility for the best refinancing options depends on your credit score. Generally, borrowers need a credit score of at least 620 to secure a refinancing loan, and higher credit scores will net you the best terms and interest rates. If you have refinancing concerns, work on boosting your credit score before applying to refinance, or talk to a financial expert for more information. Be wary of refinancing offers aimed at people with low credit scores: there may be hidden fees or predatory terms. 

Refinancing vs. Consolidation 

Sometimes, the process of loan refinancing will include loan consolidation: which means joining together multiple loans into a single loan, so you have fewer bills to pay each month. Even if you’re not able to refinance your loans at the very best interest rate, your financial health may still benefit from loan consolidation. Speak with a qualified lender to see what consolidation options are available.  

Choosing the Right Lender 

You don’t need to refinance your existing loans with the same lender. Indeed, refinancing can be a good opportunity to move to a more reputable lender who can offer better terms and rates. Look for loan offers who clearly explain all terms and conditions of the loan, without making promises that seem too good to be true. When in doubt, speak with a financial counselor. This is doubly true if you’re struggling to manage debt or trying to refinance with a lower credit score.