How Do You Refinance A Student Loan And Get A Better Interest Rate?
When student loan borrowers sign their promissary node agreeing to pay back the loan, they also agree to the interest rate detailed in the contract. For some loans this will be fixed and for others it will be variable (a margin that is added to a base rate). For federal student loans made after July 1, 2006, the interest rate is fixed. Most private student loans have variable interest rates. Your promissory note locks in the terms on your loan (including the interest rate or rate margin). You can’t "refinance" a student loan the way you can with other consumer credit products, but there are options to possibly lower your current monthly payment, reduce your interest rate, or reduce the amount you pay over the life of the loan. There is other option – student loans consolidation. By consolidating your student loans, you may end up reducing your current monthly payment because you are likely extending your repayment period. However, that means you would end up paying more over the life of the loan if you continue paying just the required amount each month. But if you’re looking for a little payment relief now and are willing to pay more (or make higher payments later to avoid accruing additional interest), consolidation could be the answer.
If your financial circumstances change, you’ll want to re-finance your student loans through consolidation, extending your pay period or lowering your monthly rate. Here’s how to re-finance a student loan and get a better interest rate. Make sure your credit is in good standing. This is essential for getting more favorable terms. Get a copy of your free credit report. This can be achieved online through one or all of the three major agencies, such as Equifax, Experian and TransUnion. Review it and make sure to fix any problems. Consolidate your federal loans and private loans separately. Compare rates from different lenders. Shop around, check the Internet, your bank, as well as your original lender. Work with your lenders to refinance your loans. Extend your repayment period, lower your interest rate or consolidate your payments into one monthly bill according to your needs. Research your options. You can consolidate private loans and federal loans together, but this usually yields le
