You’re struggling to keep up with your high-interest student loans, or you’d like to reduce your payment size. Either way, you do need some help. Enter refinance, which assists with both with little downside if they’re private, and advantages even if they’re not. But when does it make sense to refinance student loans? Read on for that and more.
Can You Explain Refinance?
Boiled down, student loan refinance is when a private lender pays off your current loans and issues you a brand spanking new loan with different terms, including a lower interest rate.
Who is Eligible for Refinancing?
In the main, you’re going to need your college sheepskin and good credit scores, plus earnings that will allow you to manage your living expenses as well as your debt payments.
Why Should I Refinance?
You should go with a student loan refinance if:
- You’ll save enough to notice. If you’re eligible for a lower rate right now, there’s little reason to wait to refinance until you have a sterling credit portfolio. Look for a lender that provides a refi bonus to increase your savings even more.
- Your student loans have high variable rates. The problem with variable rate loans is that it can be hard to forecast payments, and such loans, even if rates are low, can become pricier to repay. Before rates go up, you might want to refinance to get a fixed rate that stays the same.
- Your loans are private. As we say, there’s not much to lose by refinancing private student loans, since such loans do not qualify for programs such as income-driven repayment and public service loan forgiveness.
- Your personal finances are better. You may not have been able to qualify for refinancing as a newly minted graduate, but now that you have a good, stable job and have built up your credit, you’re less of a risk in the eyes of lenders. Oh, and did you know you can refinance as often as you’d like? What is refinancing if not accommodating?
- Rates are down. Private loan interest rates can be volatile, both fixed and variable. You should take advantage of depressed rates by refinancing.
Are There Reasons Not to Refinance?
It either isn’t or may not be a good move if:
- You have federal loans, and your income might decrease. If you’re getting bad vibes about your employment due to the pandemic, or you’re thinking you might have to shift gears, you don’t want to give up your student loan relief options.
- You’ve defaulted on a student loan. Lenders don’t like to see this, so you should at least wait until this negative mark falls off your credit report.
- You recently filed bankruptcy. Such a filing makes things more difficult – but not impossible. However, it’s all up to the lender to look past it.
- It’ll take you way longer to pay off your loans. If you do a refi and get a low monthly payment, that could translate into a longer loan term and more interest.
So, when does it make sense to refinance? If you’re eligible, and particularly if you have private loans, the answer is: now. As we’ve mentioned, you needn’t wait until your credit is perfect, and you even can pull the move multiple times. What’s more, if you go through Juno, you needn’t refinance all your loans at the same time if you don’t wish to. Plus, because JUno negotiates with lenders on your behalf, it can get you the best rates.
