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 North Carolina, refinancing a debt involves taking out a new loan to pay off an existing one. This process is commonly used by borrowers to secure lower interest rates, reduce monthly payments, or consolidate multiple debts into a single payment. The terms and availability of refinancing options can vary based on the borrower's creditworthiness, the value of collateral (if applicable), and the policies of the financial institution offering the refinance. State statutes do not specifically regulate the act of refinancing, but lenders are subject to state and federal laws that protect consumers from unfair lending practices. For example, the North Carolina Debt Collection Act regulates the behavior of debt collectors, and the North Carolina Consumer Finance Act governs consumer loans and requires lenders to be licensed. Additionally, the federal Truth in Lending Act (TILA) requires lenders to provide clear and conspicuous disclosures about the cost of credit, including information about the annual percentage rate (APR), finance charges, and payment schedule, which can help borrowers make informed decisions when considering refinancing options. Borrowers considering refinancing should consult with an attorney to understand the specific terms of their refinancing agreement and ensure that it aligns with their financial goals.