You’ve got a lot of student loan debt and you keep hearing about refinancing. It almost sounds too good to be true, except it’s real. Student loan refinancing can indeed keep cash in your pocket, but how much hinges on your credit score and overall financial state. So, in the end, does refinancing a student loan really save money? Let’s look.
What is Student Loan Refinancing?
It’s essentially the process of getting a new loan at a lower rate. Another way to say it is, student loan refinancing is morphing all or some of your loans, or even just a single loan, into a new one usually with a lower interest rate that can save you money over time or get you a lengthier repayment term that will reduce your monthly payment. Because refinance brings all your student loans together into a single payment, it also simplifies your bill paying.
What’s the Best Way to Lower Costs?
If you can handle the larger payments, the top way to lower costs over the loan’s life is to refinance to a lower interest rate loan and a truncated repayment term.
What If I’m Most Interested in a Lower Monthly Payment?
Sure, you can do a loan refinance with a longer repayment term if you’re having problems making timely payments or if the payments are eating into your living expenses. Just understand that, over time, you’ll probably pay more due to accruing interest. One thing you can do to offset that in the future is to send in a little more as your finances change for the better. Doing so can allow you to repay your loan earlier and you’ll be popped for less interest.
What If I’m Most Interested in Simplifying My Bill Paying?
Fine. To many, the answer to the question, what is refinancing? is the ability to cease making that pesky myriad of payments each month. Rather, you’ll only have one payment to keep track of.
Am I Eligible for Refinance?
Lenders naturally want to make sure you’re not a big risk, that you’ll likely repay your new loan. That means that they want to see your credit score, and whether you’ve been paying your bills before they let you refinance. They also want to see that your income will cover the loan payments plus allow you enough left over for your other bill paying. What’s more, lenders want to look over your debt load. In any case, it’s a good idea to check your credit score for errors as well as ways to bump it up in short order.
What Actions Can I Take to Refinance My Student Loans?
The first thing you should do is to figure out your chief goal, the multiple possibilities of which we’ve outlined above. You should also be certain of your current student loan status. For instance, are your current interest rates variable or fixed? Who is your loan servicer? In addition, you must find the best lender – for you. Find out whether the lender has a good customer service rep, and what kind of repayment plans are in the offing. You also want to see whether you can get a rate quote before you sign off on refinancing.
Does refinancing a student loan really save you money? Now you know that the answer is yes – in general. You still need good credit and income. If you’re interested in refi, why don’t you give Juno a shout? The initiative really knows what it’s doing and can likely help you, too.