Definition - What does Refinancing mean?
Refinancing is the process of adjusting the financing of an expense. Typically, this is done by replacing an old loan with a newer, more favorable loan. People often choose to refinance their loans because they believe that a different loan will cost them less in the long run or that it will be more beneficial to them in another way. Refinancing vehicles and homes is very common during a divorce when that property is awarded solely to one of the parties.
Justipedia explains Refinancing
An example of refinancing would be a man who takes out a $10,000.00 loan to pay for a car after he already has an original $10,000.00 loan for the same expense. In this case, he would pay off the original loan with the new loan because he believes the new loan will be easier to pay back, and will help him in the long run. This could be because the new loan has a lower interest rate, or has a longer maturity period, etc.