More than 68% of Americans have student loan debt. Carrying student loan debt can affect your creditworthiness even if you are paying it on time. It also can affect your ability to do things such as saving for retirement, qualifying for other loans, and more. It is important when managing any kind of debt to have a strategy to lower the amount you owe and eventually repay the debt to creditors. One way to pay off debt easier is to lower your interest rate by refinancing loans.
When you refinance your student loan, what it means is to take out a new loan at a lower interest rate to pay off your existing loan. This can be helpful because you are able to pay lower monthly payments, pay back less money over time, and possibly pay more money toward your principal amount owed. Common ways to refinance debt is through a credit union, private creditor or student loan company. This is also helpful because if you find it difficult to handle payments with multiple loans, you can then consolidate the payments into one loan amount and pay one payment per month.
When deciding to refinance your student loans it is important to understand factors that will make a difference in getting approved and interest rate determination. Remember that things such as credit score, debt to income ratio, payment history and delinquencies can affect trying to refinance your student loans. Also remember that all student loan refinancing options are not created equal. Do your research to ensure that you are getting the best terms for your situation.
If you are considering refinancing student loan debt, researching market interest rates is important. If you’ve received a loan in the last 5 years, chances are you already have benefited from some of the lowest interest rates in history, so you may not benefit from refinancing your loans.
Weighing your options when it comes to student loans doesn’t have to be difficult. If you have questions about loans or want to learn more, please contact us. We are here to help you on your financial journey.