Refinancing is a great way to manage your student loans. If your credit is good, you can refinance at a lower interest rate, saving thousands of dollars over the loan term. If your finances are strong, you can refinance to increase your monthly payments. This will help you pay off your loans earlier, while also saving on the accrued interest. If your finances are weak and you can’t afford the monthly payments, you can refinance to lower the payments avoiding the possibility of defaulting.
Before you can get the benefits of refinancing, you have to first choose a student loan refinancing lender that’s the best fit for you. Zeroing in on the best lender from amount the hundreds out there can be overwhelming.
Here are some things to look for in a refinance lender:
This is the #1 thing you want to look for in a lender – low interest rates. Even a point percentage rate difference can make a huge difference in the total interest that accrues over the life of the loan.
When comparing interest rates, remember that the rates published on lenders’ sites are estimated rates. You won’t necessarily get that rate. The rate you’ll qualify for depends on a combination of factors, primarily your credit score. Before you start researching lenders, make sure to check your credit score. On the refinance lender’s site, enter your credit score to see what interest rate you qualify for. Shortlist the lenders offering the most competitive refinancing rates.
There’s no point shortlisting a lender offering the lowest interest rate if you don’t meet that lender’s eligibility requirements. Different lenders have different criteria so make sure you check and only shortlist lenders whose requirements you meet. For example, if you haven’t graduated, you’ll find that you’ll qualify for refinancing with only a select few lenders.
The majority of lenders do not charge any origination or other fees to refinance student loans. However, some lenders offer rock bottom interest rates and then charge hidden fees to offset their low rates. These fees are often included in the fine print that most borrowers often just ignore. This could add on a few hundreds of dollars to the cost of your loan.
Before you sign any loan agreement, ask the lender about additional fees and also go through the terms and conditions in detail.
All lenders offer loans with fixed interest rates but not all offer variable interest rates. Variable interests can offer some attractive benefits, especially if you’re planning on paying off your loans within a short period. If you want to refinance with a variable rate, make sure your shortlisted lenders offer that option.
Pay close attention to the way the lender’s customer service treats you when asking questions. If they are curt and impatient even before you’re a customer, things will only get worse once you become a customer. Look for a lender who will take the time to answer your questions and allay your fears. Dealing with loans and payments is stressful enough. The right lender can help make the experience so much less stressful.
Don’t rush into signing up with the first refinance lender offering what seems like attractive terms. Spending some time doing your research and comparing lenders is key to choosing the best-fit lender for you.
We hoped you enjoyed this article! Remember, you can compare your personalized rates with our lending partners and potentially lower your monthly student loan payments and save money.