Refinancing your student loans is a great way to save money. You should refinance if you’re paying high-interest rates on federal or private student loans if you can get a lower interest rate and more manageable payments, and/or if you want to pay off your debt faster. While it may take a little time to complete the process, refinancing your student loans can be worthwhile.
What does it mean to refinance student loans?
Refinancing your student loans means taking out a new loan to repay an existing one. It can be done with a new lender or the same lender, and you can refinance your student loans if you have good credit and a steady income.
Why should I refinance my student loans?
You should be refinancing student loans if you’re looking to lower your interest rate or consolidate multiple loans into one. Another reason to refinance is if you want a better repayment plan. If you have multiple federal and private student loans, refinance them all into one loan to make them easier to manage.
Lastly, refinancing is also beneficial if you want to pay off your student debt faster than traditional repayment plans allow.
Can you be denied a loan refinance?
Yes, and it’s not fun. If you have bad credit, too much debt or no income, you could definitely be denied a loan refinance. In fact, according to the CFPB, around 30% of consumers who apply for mortgage refinancing have yet to be accepted. Bad credit can come from many things, including late payments, high balances and even bounced checks.
Is refinancing worth it in the long run?
Refinancing your student loans can be a great way to save money, but some have better choices. However, before making any decisions, it’s important to compare available options.
First, look at interest rates. The interest rate is how much money per year is charged to your balance. This amount must be paid in addition to your regular monthly payment. Interest rates vary between lenders and loan types (private vs. federal), so choose one with a low rate!
Next, look at fees and repayment options. Some loans have no fees or penalties, while others might require borrowers to pay an origination fee when they first get their loan or monthly maintenance fees later.
How do I pick which lender to get a loan from?
There are many different types of lenders, each with pros and cons. To help narrow down your choices, we recommend looking for lenders that offer the lowest interest rates on your loans. For example, if you already have an existing loan from another lender with an average rate, see if there’s a better option available to you by shopping around at other lenders. In addition to those two crucial factors, consider whether your chosen lender offers any repayment options or consolidation services. “Private student loans do not have the same repayment options that the federal loan program offers,” says Lantern by SoFi.
The student loan refinance process is pretty straightforward, but it can be challenging to navigate. The key is knowing what you’re looking for in terms of rates and loans when it comes time to go shopping around for a new one.
