Should you Refinance your Student Loans?
Keeping track of all your student loan payments can be tedious and time-consuming. Plus, you will have to deal with interest payments on various loans every month. Refinancing is a solution that can be right for you since this modifies your current student loan to save you some money and help you get rid of those mounting debts. Here are the main reasons why you should think about refinancing your student loans now.
Get Lower Interest Rates
Refinancing student loans allows you to combine your private and federal loans into one new loan through a private lender. Such lender could be a credit union, bank or an online lender. To know if you are qualified for a refinance, the lender will review how much you earn every month and what your credit score is. A steady job and good credit score will make you qualified for the refinance. When qualified, you will be provided with various loan terms that have both variable and fixed interest rates.
Pay Lower Monthly Payments
If you refinance your student loan, you will get a lower interest rate; however, it can also change how long you will have to pay your new loan. Often, student loans come with a repayment term of ten years. While refinancing options for student loans vary by bank, the majority of repayment options range from five to twenty-year terms. If you currently have a ten-year repayment term and you choose to refinance to a twenty-year term, your payments every month will dramatically drop.
Ensure Easy Loan Management
Some students may have more than one student loan from various lenders. And lenders tend to purchase and sell loans. This could mean your payments be sent to a new place each few years. This makes it difficult for you to manage your loans over time. But when you refinance your loan, you will combine several student loans into one debt. A single loan from a lender is definitely easy to organize, monitor and repay.
Benefit from a Flexible Repayment Plan
Private lenders are not often known for their flexibility; however, a number of them provide repayment options when you have a difficult financial situation or you go back to school. Also, some lenders will honor an existing 6-month grace period. In case you decide to refinance when you graduate or while studying, you may not need to begin paying until your grace period hasn’t expired.
Helps Release your Co-signer
A number of loan providers eliminate your cosigner from your loan following your timely payments for some months. The release of your cosigner will mean an improvement in your credit score. This results in you gaining access to new financial capital options to purchase items such as a car or home.
Work with a Bank that Cares
A lot of borrowers are not happy with the provider of their student loan. Refinancing your student loan offers you the chance to switch to a new lender that offers a better customer service. To help you decide the best lender to get refinancing options from, use online reviews. Many student loan consolidation companies provide extensive customer base both online and offline. Also, they help you as you go through the process from start to finish. Before making a decision, ensure you spend time researching your options.