When you refinance student loans, you get a new loan to pay off the balance on one or multiple existing loans. Refinancing can help reduce monthly payments and interest rates. It’s possible to refinance both federal and private student loans, so you’ll make only one payment each month.
Find the top student loan lenders that can help you refinance your existing student loans.
Refinancing your student loans can help in lowering your monthly payments, and can be a smart way to free up money in your budget.
When you decide to refinance your student loans, you’ll apply to private lenders. They’ll check into your credit history and collect information about your job and income.
If they approve your application and the terms are agreeable to you, the private lender will pay off your student loan balances, and you’ll begin making monthly payments to your new lender, under a new loan.
Refinancing could offer some financial relief if your student loan payments are negatively affecting your quality of life, but you can’t afford to pay more toward the loan’s principal.
Refinancing higher-interest student loans could translate to significant savings over the life of your loans.
First, carefully research lenders by reading online reviews from verified borrowers and those who have completed the student loan refinance process.
Applying online is a quick and easy process. You’ll need income verification like tax returns and/or pay stubs, identity verification like a driver’s license or passport, and the contact information for your current student loan lenders.
While you are waiting for approval and finalizing your new loan, be sure to continue making all your student loan payments on time. Your new lender will let you know when the balances are paid in full and when your new payments start.
While there are private student loan refinance options for nearly any credit score, the best student loan interest rates go to applicants with credit scores above 700. You can get approved with a credit score in the 600s, but you may not get the best student loan refinance rates.
Every lender has its own qualification requirements for student loan refinancing. It’s essential to shop around and compare various lenders before moving forward with your plan to refinance your student loans.
In case your credit score is low or doesn’t meet requirements, it may help to get someone with a good credit score to cosign your loan to get better rates. Nevertheless, that presents significant financial risks for your cosigner. They’ll be equally legally responsible for the debt, and if you make late payments, it will hurt their credit score. If you stop making payments, the lender will come after your cosigner to recover the balance of the loan.
Borrowers who need a cosigner should look for lenders who offer a cosigner release. When your credit improves and you’ve made a series of on-time payments, the lender may allow the cosigner to drop off the loan, leaving you solely responsible for the debt.
Student loan refinancing is a process that allows borrowers to take out a new student loan with a private lender in place of an existing loan (or multiple), in order to get better rates, lower monthly payments, and ultimately save money. Borrowers can also refinance their student loans and consolidate multiple federal and private student loans into one new loan.
Some benefits of refinancing your student loans can be:
Can you refinance government student loans?
Will pre-qualifying for a loan affect my credit score?
Federal vs. Private - Which loan can I refinance?
How can I check my eligibility to refinance?
How can you find the best refinance student loan rates?
