Are you not eligible for refinancing student loans? Here are some things you should know. (iStock)
The average student loan borrower pays $ 393 a month, according to Education Data. Students seeking additional courses, such as doctorates, receive an average of US $ 1,210 per month. Student loan borrowers generally pay between 3% and 6% interest on their loans.
If a 3% difference doesn’t seem like much, consider this example:
- Student A: $ 30,000 student loan at 6% over 15 years
The monthly payment for Student A is $ 253.16, and they pay $ 15,568 in interest.
- The monthly payment for Student A is $ 253.16, and they pay $ 15,568 in interest.
- Student B: $ 30,000 student loan at 3% for 15 years.
The monthly payment for student B is $ 207.17, and they pay $ 7,291 in interest.
- The monthly payment for student B is $ 207.17, and they pay $ 7,291 in interest.
Although the monthly payment may not seem much lower, Student B’s total interest is almost half of the interest paid by Student A.
If you are considering refinancing student loans, use an online student loan refinancing calculator to get an idea of what your new monthly payments would look like. Go to the trusted online marketplace to compare rates and lenders in minutes. (Remember: this is the best option for private student loan takers at the moment. Those on federal student loans may lose benefits when refinancing on a private loan).
THE TRICK TO REDUCE YOUR STUDENT’S INTEREST RATE
What to do if refinancing a student loan is denied
The Federal Reserve predicted it would keep interest rates low until 2023, which means that you will have time to prepare to refinance your student loans. If you don’t qualify for a refinance now, here are three things you can do to put yourself in an approval position in a few months:
- Reduce other debts
- Increase your revenue
- Review your credit report for errors
- Improve your credit score
1. Reduce other debts
Take a few months to reduce the debt you owe with credit cards. If you can reduce the debt-to-income ratio, your credit score will improve and you are more likely to get approved to refinance a loan.
If you want to take advantage of low interest rates, consider refinancing your student loans – especially if you have private student loans. Online market Credible can easily check your credit score, debt / revenue ratio and determine if you qualify for a refinance.
2. Increase your revenue
Consider taking on a secondary commitment, a second job or overtime to increase your wages. More money can help you pay other debts and can approve your credibility with creditors.
PROS AND CONS OF PRIVATE LOANS
3. Review your credit report for errors
According to Consumer Finance, the FTC has determined that 1 in 5 people have errors in their credit reports. These errors can affect your credit score and your ability to qualify for loans. Make sure to review your credit reports at least once a year. If you find errors, contact the reporting agency to request a change.
Take the time to look for the best rates possible. If you intend to refinance your loan, you want to obtain the most suitable terms for your financial situation. Credible can do the job for you.
UNEXPECTED ITEMS FROM THE CREDIT REPORT PRESENTING? IT COULD BE
4. Improve your credit score
Your credit score tells student loan lenders how risky you are for the borrower. The higher your score, the more likely you are to pay your debt. Your credit includes several important factors:
- Payment history
- Credit usage
- Credit age
- Credit mix
- New credit
Credit score agencies analyze all of these factors to calculate a three-digit number. Lenders use this number to determine whether to lend money and what interest rate to charge. Lenders will give better interest rates to borrowers with higher credit scores. Your credit score can also affect insurance rates and your ability to rent an apartment.
You can use an online tool like Credible to compare student loan refinancing rates from multiple lenders at the same time, without affecting your credit score.
How to qualify for a student loan refinance
When refinancing a student loan, you replace the old loan with a new one. Since you are getting a new loan, you will need to meet traditional loan standards. Your new lender will analyze your credit score, credit history, loan balance, payment history and revenue.
To qualify for refinancing student loans at the best rates, aim to have a credit score above 650 and a debt ratio below 50%. To maximize your savings, consider refinancing your student loan if you have a balance of more than $ 5,000. In addition, creditors want you to have a stable income.
When researching whether refinancing student loans is right for you, use an online tool like Credible to view a rate table that compares rates from multiple lenders at the same time.
WHAT ARE THE STUDENT LOAN REFINANCING FEES?
Result
Whether you’re struggling to make student loan payments or want to save money on your education, refinancing your student loan can be a practical option. With current interest rates at record lows, now can be an excellent time to refinance and save a lot of money. Although refinancing a student loan is a great way to save money, not all borrowers qualify.
Note: Federal student loan borrowers can only refinance for a private loan. If you are currently taking advantage of the postponement or forgiveness of the loan, refinancing your student loan may not be your best option. You cannot refinance back on a federal loan. If you refinance for a private loan, you may lose any future federal loan benefits. In the publication, the CARES Act protections that suspended payments and interest on federal student loans are due to expire at the end of January 2021.