Wraparound

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Wraparound

A financing device that permits an existing loan to be refinanced and new money to be advanced at an interest rate between the rate charged on the old loan and the current market interest rate. The creditor combines or "wraps" the remainder of the old loan with the new loan at the intermediate rate.

Wraparound

A loan whereby the borrower re-finances a previous loan at an interest rate between the current market rate and the interest rate at which the first loan was made, which is presumably lower. This allows the borrower to re-finance the first loan without being forced to accept a significantly higher interest rate.