In fact, saving money by refinancing high-interest debt into lower-interest debt could be the reason you wanted a personal loan in the first place. That’s one of the main reasons people seek personal loans, according to a Credit Karma study.

But what if you’d like to get a lower interest rate for an existing personal loan — and potentially save money — or decrease the number or amount of your monthly payments? Does it make sense to refinance your personal loan?

In some situations, refinancing a personal loan might make sense for you. But you should first examine the pros and cons of refinancing. Those include whether you’ll actually end up saving money by refinancing the loan and how your credit can play into the decision. You also need to consider the suggested steps for getting the lowest interest rate and lowest fees available for you.

When you refinance a personal loan, you’re replacing the existing loan with a new one. The funds from the new loan are used to pay off the old one. Refinancing a personal loan offers several potential advantages:

The opportunity to get a lower interest rate than what you’re paying on your current loan. If your credit has improved since you first took out your personal loan, you may be able to qualify for a better rate on a new loan. A lower interest rate could save you money on the overall cost of the loan.

Decreasing the dollar amount of your monthly payments by stretching out the length of the loan. For example, if you’re struggling to make payments with a loan term of 36 months, refinancing into 48 months could reduce your monthly payment. Keep in mind that extending the term of the loan can also mean paying more interest in the long run.

Cutting the number of payments by switching from a longer repayment period (like 36 months) to a shorter repayment period (like 24 months). If your financial situation has changed and you can afford to pay more per month to pay off your loan faster, shortening the loan term could help you get rid of the debt sooner.