Refinancing student loans can help you reach various goals, such as reducing your monthly payment. One of the most common benefits of this process is the opportunity to save money. Below are some reasons why you should look into student loan refinancing. For example, according to Lantern Credit by SoFi, “Student loan refinancing can sound complex, but it’s quite simple.”
Lowering Interest Rates
One of the most important factors that a student loan refinancer must consider is the type of interest rate that they can get. Private lenders can offer varying interest rates depending on credit history and income. For example, if you have a good credit history and stable income, you might be able to lower your student loan interest rate by refinancing. However, it’s important to understand the difference between a fixed and a variable rate loan before you do so.
Consolidating Multiple Loans Into One Payment
Another critical advantage of refinancing is that it can allow you to consolidate multiple loans into one monthly payment. Doing so can help save money and streamline the payment process. Although the federal government provides a program that allows people to consolidate their student loans, it does not lower the interest rate. Instead, it rounds up the payments to the nearest one-eighth percent.
Adjust Loan Terms
When refinancing your student loan, you can choose a repayment term that fits your goals. For example, you can usually get a shorter or longer repayment term depending on your loan type. For instance, if a person has already paid off their student loan for five years, they can get a lower monthly payment by refinancing to a longer term.
Removing or Adding a Cosigner
Refinancing allows people to remove their parents from their student loan agreements. Doing so can help ease the burden of debt and allow them to focus on their financial goals. For example, if you have a limited credit history and insufficient income to qualify for a new loan, adding a qualified cosigner can help you lower the interest rate. Even if you’re already approved for a new loan, having a more qualified cosigner can still help lower the interest rate.
Gain Financial Advocate
Although the level of customer service varies depending on the lender and bank, it’s still important to compare each company’s various features and services when it comes to refinancing. For example, one of the first steps that a person should take when choosing a company for refinancing is to talk to the company itself. It’s important that the company has a positive reputation and is known for providing excellent customer service.
Refinancing a student loan offers a variety of benefits that shouldn’t be passed up. For example, getting a quote online is simple with sites like SoFi. You can get multiple loan refinancing quotes to compare. This will allow you to decide and pick the right lender and loan terms for your situation.