Refinance Student Loan
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Refinancing is a good option for students who are unable to repay installments immediately after completing their higher studies. Most banks offer refinance student loan facilities. It is useful for students to consider different aspects of their education loan policy before applying for refinance.[br]
How to Refinance Student Loan
Individuals have two methods to refinance student loan:
By opting for lower interest rates.
By increasing the time period of repayment.
Opting for lower interest rates is ideal for individuals who want to pay off their long standing debts quickly, without extending the repayment time. As it reduces the monthly installments, repayment is easier. For individuals with high monthly expenses, extending the time period is a better alternative.
Refinance Student Loan: Essential Considerations
When an individual opts to refinance student loan, all terms and conditions of the previous loan agreement must be considered. Refinancing should act as a cover to loan installments and provide monetary assistance for regular expenses.
Other essential considerations while refinancing student loan are:[br]
Federal and Private Loans: Students with both federal and private loans should consider separate refinancing options. Federal loans are low-interest loans while private loans charge higher rates of interest. Private loans are simply personal loans. Their purpose is to ensure that the students’ earning will increase after higher studies. If a common refinance option is used for both the types of loans, students cannot possible capitalize on low-interest fed loans. However, separate refinancing will considerably reduce interest rates on both the types of loans.
Credit Report: Student loan rates are based on an individual’s credit history. If an individual holds a good credit report, s/he will be able to seek low-interest rates. Thus, before applying for a refinance, students must check their credit report from the local credit bureau. If the credit report is adverse, they can try for secured credit cards. Smart use of secured credit card and timely payment of bills will be reflected on the credit report.
Different lenders have different interest rate options. So, students should research the market thoroughly to get the best possible deal.