Student loans can often hang over our heads and be a source of distress. Refinancing your loan can be a great option to assist you in paying off your debt and getting better rates whilst doing so. Currently over 8 million former students may be eligible to refinance their loans receiving much lower interest rates, however not everyone is aware this is an option. There are a few different paths you can go down dependent on your situation and your aims.
Things to Consider Before Refinancing
Before you decide to refinance your student loans, think about the following:
Purpose
The first thing to think about is what you main aim is when it comes to your debt. There are plenty of positive reasons to refinance:
Shop Around for the Best Interest Rates
If you are looking for a lower interest rate, firstly find out what your current rate is as this can vary greatly, depending on the loan company you originally borrowed from. Then you can research into different loan companies that can offer you better rates. There are many companies that now specialize in refinancing student loans, so do some investigation work to get the best deal –some companies even offer rates as low as 2%. Just make sure you look into the payoff amount (i.e. the full amount you owe) which will be how much you are intending to borrow in full. Different companies require different assurances: cosigners, income requirements etc.
How Much can you Pay Monthly?
This of course depends on your current income, as well as your outgoings and any other additional loans you may have. Figure out your monthly budget – remember to be flexible – and then see how much you are able to comfortably pay. According to Federal advice, a good rule for a minimum amount is 10 percent of your monthly income, however you may want to pay more/less depending on your circumstances. Your credit score will also be a defining factor in the rate you receive.
Flexibility
A great aspect of refinancing your loan is the flexibility that comes with it. Some companies can be extremely flexible when it comes to payment plans: they might give you a large period at the beginning of your contract when you do not have to pay anything, they might be a fallback for unexpected unemployment. This is another reason to look around at different companies and work out all the positives.
To evaluate, refinancing works for student loans in a positive way for many people, as it gives you more opportunity for flexibility. The best advice is to look around at different companies and figure out which one is the best for you.
Things to Consider Before Refinancing
Before you decide to refinance your student loans, think about the following:
Purpose
The first thing to think about is what you main aim is when it comes to your debt. There are plenty of positive reasons to refinance:
- Lower monthly payments
- Get a lower interest rate
- Receive a more flexible repayment plan
- Remove a cosigner from your debt
- Consolidate several student loans into one
- Pay off your loan faster
Shop Around for the Best Interest Rates
If you are looking for a lower interest rate, firstly find out what your current rate is as this can vary greatly, depending on the loan company you originally borrowed from. Then you can research into different loan companies that can offer you better rates. There are many companies that now specialize in refinancing student loans, so do some investigation work to get the best deal –some companies even offer rates as low as 2%. Just make sure you look into the payoff amount (i.e. the full amount you owe) which will be how much you are intending to borrow in full. Different companies require different assurances: cosigners, income requirements etc.
How Much can you Pay Monthly?
This of course depends on your current income, as well as your outgoings and any other additional loans you may have. Figure out your monthly budget – remember to be flexible – and then see how much you are able to comfortably pay. According to Federal advice, a good rule for a minimum amount is 10 percent of your monthly income, however you may want to pay more/less depending on your circumstances. Your credit score will also be a defining factor in the rate you receive.
Flexibility
A great aspect of refinancing your loan is the flexibility that comes with it. Some companies can be extremely flexible when it comes to payment plans: they might give you a large period at the beginning of your contract when you do not have to pay anything, they might be a fallback for unexpected unemployment. This is another reason to look around at different companies and work out all the positives.
To evaluate, refinancing works for student loans in a positive way for many people, as it gives you more opportunity for flexibility. The best advice is to look around at different companies and figure out which one is the best for you.