How to Choose a Lender to Refinance Your Student Loans
Have you thought about refinancing your student loans? If you have, you may be wondering how to choose the best lender to work with. If you have not thought about refinancing your loans, you are probably now curious about it.
When it comes down to it, the lender you choose will make a difference in how much your student loans cost and whether or not you get approved to even refinance.
Below, we will go over some things to keep in mind when you look for the right lender to meet your needs.
What Are the Eligibility Requirements?
Each lender will have a different set of eligibility requirements that you must meet before your application will be approved. If you do not meet these requirements, you may as well not even waste your time applying.
Most of the time, lenders will require you to have a job, a good credit score, and the ability to pay for your student loans should the refinance be accepted. Some lenders will focus less on your credit score and more on your credit history or more on your employment history.
What Are the Interest Rates?
Refinancing your student loan will help you find a better interest rate, but you should shop lenders to find out which one offers the best rate. As you look around, you will find that many lenders have different rates for variable and fixed loans, so pay attention to which option you choose.
Are There Any Penalties for Early Pay Off?
Next, you want to find out if there is a penalty fee to pay if you choose to pay off your student loan early. While many lenders will not charge a fee, there are equally as many that do. What this means is that if you have a loan term of five years, but pay it off in two, you may owe a hefty chunk of money.
What Are the Repayment Options?
Many lenders offer a variety of repayment options and terms. You should choose a lender that offers more than just one or two options. For instance, look for an institution that has a 5, 7, 10, 15, and 20-year pay off term. That way, you can choose whichever meets your needs and fits within your budget.
What Happens if You Fall on Hard Times?
Lastly, determine what options are available if you fall on hard financial times. Many times, there are no options and you are stuck with paying the loan off; however, some lenders will offer a short forbearance period to allow you time to get back on your feet.
It is vital that you take all of these things into consideration when you shop for a lender to refinance your student loans. If you choose the wrong one, you could be left paying more than you needed to and you may be unhappy with the decision you made. It does payoff to spend time asking the right questions and evaluating the lender you want to work with.