Student loans refinancing
Student loan refinancing is an aid needed by students who have some problems paying their Student loan on time. A student may consider refinancing student loans when he/she cannot handles payments with multiple loans. Multiple loans can be described as multiple interest rates. By refinancing student loans, students may be able to consolidate their multiple loan payments into one low interest rate. Students may significantly lower their recurring premiums by refinancing their loans.
Process[edit]
Student loan lenders will buy out your loan from your existing servicer, allowing you to have a new loan at a potentially lower interest rate. This process will also consolidate all of the loans you refinance into one convenient payment.[1] Like any form of debt, your goal with a student loan should be to pay as low an interest rate as possible. Other than a mortgage, you will likely never have a debt as large as your student loan. If you are able to reduce the interest rate by refinancing, then you should consider the transaction.
You need to find a lender willing to refinance your student loans and borrowers generally want that offer to result in savings over their existing loans. Then, you submit your personal information to them (which often includes loan balance, income, credit score) to get a personalized refinancing offer. If you get an offer that you like, you then usually need to send them a few documents (e.g. a pay stub) to prove the information you provided is true and then sign on the new loan. There are existing loan comparison tools such as student-lending marketplaces to help borrowers get the transparency of rates they deserve.
Loan approval rules vary by lender. However, all of the lenders will want to ensure that you have excellent credit.[2] Most lenders that refinance loans use some version of the FICO credit score. To qualify, you will likely need a very good or exceptional score. Although the exact score varies, you will likely need a score above 740.[3] In addition, you will need to demonstrate that you can afford your payments. Most lenders will need to see a history of on-time payments being made. Lenders will also look at your debt burden and cash flow. If you are struggling to repay your student loans, then refinancing is not a good option.
Warning: if you refinance a government student loan, you will be giving up important benefits including the ability to use income-driven repayment programs. Only refinance if you are highly confident in your ability to make payments on time.
See also[edit]
References[edit]
- ↑ "Loan Consolidation | Federal Student Aid". studentaid.ed.gov. Retrieved 2015-11-10.
- ↑ "Should I refinance my private student loan into one with a lower rate?". Consumer Financial Protection Bureau. Retrieved 2018-12-03.
- ↑ "What Is a Good Credit Score?". 2016-04-21. Retrieved 2018-12-03.
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