If you want to refinance your student loans to get a better interest rate or different repayment terms, you may be wondering about the costs of doing so. Thankfully, there are very few if any fees related to actually refinancing your student loans. Here’s what you need to know about what you could be docked for, however.
When you go to refinance a mortgage, lenders will sometimes hit borrowers with fees, hidden or not. However, there’s good news when it comes to student loans and refinancing: lenders rarely, if ever, have fees or even hidden fees when you go to refinance your student loans. There are laws in place to protect student borrowers, so lenders have to divulge all fees upfront.
Instead, it can save you money to refinance. You could potentially benefit from a lower interest rate and opt for a higher payment each month, which will save you plenty of cash in the long run.
Interest is where most of the cost will come from. Though one of the main goals of refinancing is to lower your interest rate, it will still accrue over the life of the loan. Shopping around various lenders to find the ideal interest rate is important. After all, the difference of just a few points can have a huge impact on the overall cost of the refinanced loan.
Late payments when it comes to any type of loan or bill will usually result in a fee. The fee varies from lender to lender and even loan to loan. The late fee for your particular loans will be detailed in the terms and conditions you agreed to when you refinanced. They will also usually detail what will happen if you continue to fail to pay.
Some lenders will allow you to avoid this fee if you reach out to them before you are late with your payment. If you are ever struggling to pay your loan, talk to your lender – don’t simply let it default. Even missing one payment can hurt your credit score.
Refinancing your student loans can come with a ton of benefits for your finances. While you don’t have to worry about hidden fees when you actually refinance, you do need to keep on top of your payment schedule. Shop around to find the right interest rate and repayment terms 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.