Low interest rates have made refinancing student loans attractive to many borrowers, but it’s important to compare loan rates and terms to find the best deal. (iStock)
If you want to pay off your student loans faster or simplify the loan repayment process, a student loan refinance may be the solution for you. A loan refinance involves getting a new loan from a private lender and using it to pay off one or more existing student loans. It can consolidate multiple debts, lower your monthly loan payments, and potentially save money — as long as you choose the best student loan terms for refinancing.
With the Federal Reserve setting the current interest rates at which banks can borrow at nearly 0%, many refinancing companies are offering unprecedented lending rates. But you’ll need a good credit score and proof of income to qualify. To compare rates and terms with multiple private lenders to ensure you get the best loan rate possible, check out Credible.
Credible also offers a handy rate chart that makes the process of refinancing student loans easier – just enter your loan amount and your estimated credit score to see pre-qualified rates.
When comparing loan rates, there are a few key questions to keep in mind to ensure you get the best possible terms for your refinance loan.
How to choose the best student loan refinance offer?
There are three simple things you can do to ensure you choose the best student loan terms for refinancing.
1. Determine which loans to include in your refinance: Generally, you’ll only want to include private loans, because refinancing federal student loans would require you to give up important benefits, including the ability to change your loan repayment options and the possibility of loan forgiveness. student.
2. Shop around and compare lenders: Different private lenders have their own qualification criteria. Rates can vary widely between each other, so get quotes (watch for when rates drop) from several private lenders to see which one gives you both the lowest loan payment and the lowest total loan costs. Find your rate now.
3. Calculate your potential savings: Credible’s student loan refinance calculator can help you get an idea of what your new payment would be with each private lender.
Ultimately, the best way to choose the right student loan refinance offer is to get quotes from multiple lenders and see which one best suits your goals. Look for a lender that offers low rates, a loan repayment term that isn’t too long, and a monthly payment that easily fits into your budget. Visit Credible today to find a student loan refinance offer that’s right for you.
HOW TO REFINANCE HIGH INTEREST STUDENT LOANS
Is it worth refinancing student loans?
When comparing rates, think about what you hope to accomplish by refinancing student loans and whether it’s worth it. Some of the most common reasons to refinance include:
- Reduce your monthly loan payment: You can cancel your loan repayment by getting a lower interest rate, refinancing for a longer repayment term, or both.
- Reduction of total interest charges: Reducing your interest rate can reduce the cost of borrowing. However, you’ll want to make sure you don’t extend your loan repayment period too much, as you could increase the total costs by doing so, as you’ll end up paying interest over a longer period of time.
- Simplification of the reimbursement process: You can take out a new refinance loan to pay off multiple existing loans, reducing the number of monthly loan payments.
- Repay loans faster: If you shorten your loan repayment time with your refinance loan, you can get out of debt sooner and reduce borrowing costs by paying interest for less time.
The decision you make about which loan is right for you and whether the time is right to refinance will depend on your goals.
WHY YOU’LL LIKELY SAVE MONEY IF YOU REFINANCE STUDENT LOANS NOW
What are the advantages and disadvantages?
Advantages
- You can reduce your monthly loan payment.
- You can reduce your total costs.
- You can simplify the repayment process if you only have one loan to manage instead of several.
Credible can walk you through all of these steps and help you understand all of the benefits.
The inconvenients
- You might end up paying more over time if you lengthen your repayment period (but this is easily avoided by choosing a loan with the same or shorter loan term).
- Not everyone can qualify for a new refinance loan at a great rate. If you find yourself in this situation, a co-signer could help you get approved.
Federal loan refinancing, on the other hand, has significant drawbacks, including the abandonment of generous deferment or forbearance policies; losing the ability to modify your repayment plan as needed or switch to income-based payment plans; and give up any chance of loan forgiveness. Generally, you don’t want to refinance federal loans unless you’re sure you don’t need the special benefits or protections they offer.
