If you are wondering if you can refinance your student loan. The answer is yes you can actually refinance a student loan. Read on and find out more.
What your real goal is
A good number of people in your position will want to lower their monthly costs. Others may just want to consolidate all their loans into a single payment. Whichever way you go, you'll want to set a goal before you begin planning.
Things to consider when you refinance your student loan are;
First things first
Regardless of the lender, you work with when you refinance your student loan, there will be certain qualifications you will have to meet.
One almost universal qualification is that none of your outstanding loans are allowed to have what is called "in-school" status. In other words, you cannot be currently paying for your education with an active loan.
Another requirement is that many lending institutions set a minimum balance. That amount will vary from lender to lender, so make sure you know upfront what that balance is before you spend too much time with that lender.
Two ways to refinance your student loan
When you refinance your student loan you can reduce your monthly payments one of two ways:
- Getting a lower interest rate
- Extending the duration of your loan
Most people will try to get the lowest interest rate possible because this will mean you will pay far less in total interest costs by the time you have paid off your loan.
That said if you can't get the lowest interest rates you should consider the refinance of your student loan by extending the term of your loan. When you do this, your monthly payments will be lower.
The downside is that the total dollars you pay for interest will be substantially higher. So, as stated above, you need to set your priorities before you begin implementing your plan to refinance your student loan.
Your Credit Score
Before your refinance a student loan be certain that your score is high enough to make you a solid bet to the lending institution of your choice.These days no one has an excuse for not looking at their credit report.
Do it now. Then take the time to review your credit report. If you find inconsistencies or problems, clear them up now. It will pay off in lower interest rates and better terms when you finally refinance your student loan.
Ultimately when you refinance your student loan, your goal should be to make your career -- and the rest of your life -- more manageable once you leave school. Be intelligent about investigating all the choices you might have before you make an informed decision.
If you're careful, you won't be bogged down for the rest of your life paying back your loans.