Now is a good time to refinance student loans – here’s how to save the most money

There may never be a better time to refinance student loans. Here are some tips to follow if you are thinking about refinancing a student loan. (iStock)

To support the economy during the coronavirus pandemic, the Federal Reserve has set the benchmark interest rate near record lows. Since banks are able to borrow from each other at extremely affordable rates, lenders pass these savings on to consumers. As a result, depending on what type you have, Now might be a great time to refinance student loans if you are a qualified borrower.

Refinancing can reduce your interest rate, Help you remove a co-signer from a loan, and allow you to modify other key terms of your current debt. There is one important caveat, however, that due to the payment of student loans and the deferral of interest on federal student loans until September 30, 2021, it is not currently beneficial to refinance federal loans. If federal student loans are refinanced, borrowers will lose access to this suspension as well as other federal benefits and protections (eg. income-based repayment plans and student loan exemption programs).

However, when it comes to refinancing private student loans, perhaps now is the time to act. See if you qualify for a private student loan refinance today through Credible. With Credible you can compare rates and lenders instantly to see how much you could save on monthly payments and accumulate your savings for the duration of your loan.

5 Ways To Save Money By Refinancing Student Loans

If you’re considering refinancing a private student loan, you’ll want to make sure you make the smartest choices possible when it comes to selecting your new lender, as well as avoiding some student loan refinancing mistakes.

Here are five key tips to help you through the process and make sure your private student loan refinancing effort is a success.

  1. Compare rates and lenders
  2. Use a student loan refinance calculator
  3. Check your credit score
  4. Make sure you have a stable income
  5. Pay off or consolidate debts

1. Compare rates and lenders

Unlike federal student loans, there are no standardized rates for private refinance loans. Rates can vary from lender to lender, so it’s essential that you shop around and compare loan terms to get the lowest interest rate.

You can visit Credible to display a rate table that compares the rates of several lenders at the same time to easily find the most affordable option.

DO I NEED TO REFINANCE MY STUDENT LOANS?

2. Use a student loan refinance calculator

It is important to understand math. Specifically, you want to know how your monthly payments and total repayment costs will change when you get a new loan. The easiest way to assess the financial impact of refinancing is to use an online student loan refinance calculator to see how your new loan would affect your finances.

3. Check your credit score

Student lenders want to make sure that you are a qualified borrower. Before you approve for a loan refinance, they will check your credit score to see if you have a history of responsible borrowing behavior. Your credit score will determine both if you’re approved and the rate you pay, so check your credit before you apply.

If your score is not that high, take some steps to improve it to maximize your chances of getting an affordable refinance loan. If you want to see where you are with your current score, plug some of your information into Credible’s free online tools.

WHAT ARE THE REFINANCING RATES FOR STUDENT LOANS?

4. Make sure you have a stable income

Lenders also look at your income to determine if you will be able to meet your monthly payments. If you don’t have proof that you’ve been in your job for a while and your salary has remained stable, you may not be able to qualify for a student loan refinance.

CAN I REFINANCE PART OF MY STUDENT LOAN?

5. Pay off or consolidate other debts

Finally, lenders look at your other debts before they approve you for a loan, because they want to make sure that you don’t burn out and risk not being able to make payments.

If you have a lot of other debt, pay part of it getting approved before refinancing your private student loans. Paying off your debt could also help improve your credit score.

You also have the option of consolidating high-interest debt with a personal loan to reduce your monthly payment. This improves your debt-to-debt ratio, which in turn maximizes your chances of loan approval. This is because lenders don’t just look at your total debt in a vacuum, but rather compare your monthly payments to your income to see how much of your monthly income they are absorbing.

You can visit Credible to compare rates and lenders and find the best personal loan rate. A personal loan calculator It will also help you see how refinancing other debts could affect your monthly payment costs.

HOW DOES DEBT CONSOLIDATION AFFECT YOUR CREDIT RATING?

By making sure your debt ratio isn’t too high, improving your credit before you apply, and looking for a low-cost loan, you should be able to take full advantage of today’s unique opportunity to refinance private student loans.


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