If you feel yourself becoming engulfed by the flames of student loan debt, it might be time to take a good long look at your financial situation. If you still haven’t refinanced or consolidated your loans, you are effectively ‘burning money’ – your repayments could be at a significantly lower rate. Here are 7 magnificent reasons why you need to talk to a student loan refinancing specialist as soon as possible.
1) EXPERT ADVICE
Navigating your way through the various types of consolidation and refinancing packages can be daunting and confusing. A lack of understanding of the available options is actually the most common reason people give for not refinancing and continuing to overpay. Any reputable student loan refinancing company will offer free consultations & advice and can really make the whole process relatively painless and stress free.
2) LOWER MONTHLY PAYMENTS
Your student loan adviser will be able to explain to you which are you best refinancing options. Not only can you potentially lower your rate of interest but you can also change your terms of repayment. For example, if you currently have a loan with a ten year repayment plan and you change that to twenty years, your monthly payments could be drastically reduced. You need to strike the right balance between interest rates and payment terms to find the repayment level that is right for your current level of income.
3) REDUCED INTEREST RATE
If you have become more financially stable since graduation, it probable that your credit score has improved. This makes you less of a financial risk for lenders and therefore you should be entitled to a more favorable rate of interest, and potentially, a lower overall repayment total. Use this refinancing opportunity to take advantage of your relative financial stability and strike a better deal.
4) FLEXIBLE REPAYMENT PLANS
Federal loans include various payment options such as Pay As You Earn, Income Based Repayment and Income Contingent Repayment. As your financial circumstances change, so does the repayment plan best suited to your particular situation. As your earnings increase so should your rate of repayment, enabling you to repay your total loans in the shortest time period possible and gain financial freedom. Be aware of the benefits and drawbacks of each repayment type.
5) CHANGE YOUR BANK
Some banks do not give borrowers the best advice as it suits them to have borrowers in a repayment program that earns them a higher rate of interest. If you feel that your bank has given you bad advice, refinancing your loans gives you the opportunity to switch accounts to a more honest bank with reliable customer service. Look into the available options or take advice from your student loan advisor to find yourself a more suitable or flexible account.
6) RELEASE A COSIGNER
A cosigner is basically someone who guarantees your repayments. If this is a friend or family member it can add an extra stress to your relationship as well as possibly harming their credit rating (if you default) Refinancing may present the possibility to ‘release’ your cosigner. This will be easier to arrange if you have improved your financial status since you took out your loans. Check the terms of different banks to see which offers this cosigner release option.
7) CONSOLIDATE MULTIPLE LOANS
Many student borrowers have multiple loans with multiple lenders. This can make it difficult to keep track of the different terms and conditions. Add to that the fact that loans can be bought and sold by lenders and the situation can become extremely complex. Refinancing allows you to put all of your loans with one lender with one set of terms and conditions, making your repayments much more straightforward and your life less stressful.
If you would like advice on any of these points why not contact Aidinest for a free consultation? We’re always happy to help!
Author: Jim Davies
Image: Courtesy of Flickr