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 Kentucky, as in other states, refinancing a debt involves taking out a new loan to pay off an existing one. This process is often sought by borrowers to secure a lower interest rate, reduce monthly payments, or consolidate multiple debts into a single payment. The terms and availability of refinancing options are influenced by the borrower's creditworthiness, current market interest rates, and the policies of financial institutions. State statutes do not specifically govern the act of refinancing; however, Kentucky law, including the Kentucky Consumer Protection Act, provides general protections against deceptive financial practices. Additionally, federal laws such as the Truth in Lending Act (TILA) require lenders to provide clear and conspicuous disclosures about the terms and costs of loans, which apply to refinancing transactions. Borrowers considering refinancing should carefully review the terms of the new loan to ensure it meets their financial goals and should consult with an attorney if they have specific legal questions or concerns about the refinancing process.