Obtaining this degree took a lot of hard work. If you took out student loans to cover the costs, you are probably working hard to pay off the debt. But you might be paying more than you need to.
The current interest rate on student loans has declined due to the impact of the coronavirus pandemic on the economy. It might be time to apply for a student loan refinance. You can pay off debt faster by reducing the total amount you owe. With Credible you can compare student loan refinancing offers and find out what rate you qualify for today.
When you start to look at lenders, there are a few things to consider.
1. Should I refinance my student loans?
The decision to refinance will depend on the type of loan you have. You can’t refinance federal student loans (Congress sets the rate). If you want to refinance them at a lower interest rate, you will need to convert them to private student loans. However, private loans do not offer some of the benefits that federal loans do.
For example, federal programs offer student loan forgiveness for people in specific fields, such as teaching, or if you work in the public service. You can get a discount on your balance if you make a certain number of payments. Federal loans can also offer income-based repayment plans, where your monthly payment is adjusted according to your salary. And federal loans were automatically deferred during the COVID-19 crisis to help borrowers meet their monthly expenses. Refinancing to a private loan would forgo these potential benefits.
If you have private loans, you may want to consider a student loan refinance if the current rate is lower than yours. You can use Credible to compare private student lenders and see who gives you the best rates and benefits.
Another reason for taking out a new loan is to convert a variable interest rate to a fixed interest rate at a lower percentage. If you’ve been diligent in paying off your loan and improving your credit history, you may qualify for a lower rate than you had when you first took out the loan. If you have multiple loans from different lenders, refinancing can help you consolidate debt in one payment. The new loan may also have a lower monthly payment, freeing up money that you can use to pursue other financial goals.
If you are confident in your credit rating and history, then use Credible’s free online tools to see what rates are available to you. Credible makes it easy to check the rates of different lenders without affecting your credit score.
2. How do I refinance my student loans?
If you determine that refinancing a student loan is smart, you can choose to refinance with your current lender or apply for a loan from a new financial institution. Obtaining a new loan will be similar to the steps you took to obtain your existing loans.
First, find the best lender. The most efficient way to compare offers is to use a tool like Credible which allows you to view a rate chart that displays the rates of some of the top student loan refinancing companies at once.
To provide you with an accurate quote, lenders may ask you for personal information, including how much debt you want to refinance, your income, your current monthly debt payment, your education level, and your employment status. . Lenders can also check your credit history.
Once you’ve decided which lender’s offer and terms are right for you, you’ll need to apply. The app will typically ask for documents, such as proof of employment, residency, graduation, and citizenship. At this point, the lender will conduct a thorough investigation, which will affect your credit score.
Once your application is approved, you will sign the new loan documents. At that time, the lender will pay off the existing loan balances and you will make the payments on your new loan according to the terms.
3. How much money can I save by refinancing my student loans?
It depends on the rates of your initial loans. To determine how a new loan could impact your monthly budget, use an online student loan refinance calculator like Credible’s to estimate the new payment. You can also calculate the total interest you will pay on the new loan.
For example, the average amount of student debt is $ 32,731. If you recently graduated with this amount of debt and have a student loan with an interest rate of 6.5% and a 10-year repayment plan, your monthly payment is $ 372. Refinancing that debt into a new loan with an interest rate of 3.5% and the same term would reduce your payment to $ 324 and reduce the overall amount of interest you would pay by $ 5,759.
If you can qualify for a Incredibly Cheap Student Loan Refinance Rate, the more you can save. You’ll want to do your best, so take a few steps to increase your credit score to meet the criteria. For example, you need to pay all of your monthly bills on time to establish a good payment history. To concern your debt ratio, which is the amount of your debt relative to your income level. Most lenders like to see borrowers with less than 40 percent. And it would help if you had a good income that shows you can pay off student loan repayments and your other expenses without difficulty.
Overall, refinancing a student loan can potentially save you thousands of dollars over the life of your loan.