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refinancing a debt

When you refinance a debt, you replace one debt with another debt. The goal of refinancing a debt is usually to secure a better interest rate and payment terms—such as lower monthly payments. You might also seek to consolidate some debts through refinancing by borrowing enough money from an existing lender to pay off some debts to other lenders (such as credit cards) and make one smaller monthly payment, rather than multiple monthly payments.

In Connecticut, refinancing a debt involves taking out a new loan to pay off an existing one. This financial strategy is often used to take advantage of lower interest rates, better payment terms, or to consolidate multiple debts into a single payment. When refinancing, it's important to consider factors such as the new loan's interest rate, fees, and the repayment period. Connecticut residents must comply with both state and federal lending laws, which regulate the terms and disclosures of refinancing loans. These laws are designed to protect consumers from unfair lending practices and ensure that lenders provide clear information about the costs and obligations associated with the new loan. Borrowers in Connecticut should also be aware of the potential for 'loan flipping,' where frequent refinancing leads to increased fees and interest, ultimately making the debt more expensive. Consulting with an attorney or a financial advisor before refinancing can help ensure that the new loan terms are in the borrower's best interest.

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Creditor / Debtor

refinancing a debt

Individual & Family Legal Plan

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Connecticut State Code

Connecticut State Code

Creditor / Debtor

refinancing a debt

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