Those with large student loans can benefit from refinancing them into lower rates to help pay them off quicker. Now is a great time to consider refinancing student loans as interest rates remain low as a result of the Federal Reserve attempting to stimulate the economy during the COVID-19 pandemic.
If you plan to refinance student loans follow these tips to ensure you get the best offer.
1. Look at the Loan Type
Consider refinancing your private student loans because interest rates are at historic lows.
“Now is a good time to take advantage of these low rates, which could potentially save some borrowers hundreds or thousands in interest over the life of their loans,” said Barry Coleman, vice president of counseling and education programs for the National Foundation for Credit Counseling, a Washington, D.C.-based non-profit organization.
2. Check Your Credit Score
With less-than-excellent credit, borrowers may find that the new loan rate might not be any better than their current loan or might not cover the entire balance, she said. You can check your credit score for free through the three credit reporting bureaus.
3. Calculate your interest with a student loan refinancing calculator
Before you start the process to refinance your student loan, a refinancing calculator may be useful to determine how much money you could save and what those monthly costs will be. A lower interest rate can help you save thousands of dollars over the life of your loan and help you pay it down sooner.
4. Shop and compare lenders
Borrowers should shop around for the best deal when refinancing for student loans to avoid buyer’s remorse and to be sure that they are getting the best rate, loan terms, and ease of the application process, Tayne said.
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