Consolidating or refinancing student loans is good financial move if it improves your financial health. In order to make a well-informed decision about student loan refinance companies. Go into it cautiously. Not every company out there is legit.
Once you find a few reputable solid companies, get out your checklist for what you want to see from your prospective new lender. Here are some good questions to ask yourself to get the process started.
What are the requirements for obtaining the loan?
The whole idea of refinancing is to get a better deal on repayments. But first, you have to get approved. Most people unfamiliar with lending institutions have little knowledge of what makes a person eligible for a loan. Every financial company has a different set of guidelines. The lenders will look at credit score, salary, and debt-to income ratios.
What are the rates?
The loan rate is most likely what you are eyeing first. Comparing rates between lenders can be frustrating. Variable rate loans begin as a lower rate, but the risk is still there that the rates will increase over time. Fixed income rates are less risky. Rates will vary depending on the length of repayment; a shorter term loan gets a lower rate. Federal loan borrowers looking for a better rate by taking their loans to a private debt need to know they may be giving up certain federal protections like deferment and loan forgiveness programs.
What are the strengths and weaknesses of the lender?
Pay attention to the pitch from the lender? A large bank like Wells Fargo, focuses on issuing new student loans, where as a startup companies like SoFi, focus on community based loans. Their costs are significantly lower than a bank because applications are online. Look into what the lender offers in ways like temporary repayment reprieves, mentorship, and little extras that could go a long way, creating a win-win relationship.
What are the repayment terms?
Borrowers looking for an upper hand in student loan debt need to know exact terms of their loans. Are there fees and how much are the fees should you miss a payment? What kind of reduction exists for automatic payment withdrawals? Some companies offer a .25% interest rate reduction for this. It is important to know what is attached to the loans, and exactly when payment is due.
What is the life term of the refinanced loan?
The term is the expected amount of years to pay off the loan. Most banks offer 5, 10, 15, and 20 year periods for repaying a loan. The shorter the term the least amount of interest; this is pertinent because interest on a long term loan accrue so fast. Keep in mind how much you can afford to pay in the present. A 5 year term will have higher monthly payments, but the interest won’t get out of hand and the loan won’t become unmanageable.
What type of customer service and support does the lender provide?
This may seem minor, but everyone knows how awful it is to try and accomplish something when dealing with poor customer service. Some companies’ customer service can even behave threatening and hostile. Remember, you are going to be with this bank for a very long time and a working relationship is definable by how they are going to treat you.
What type of customer service and support does the lender provide?
This may seem minor, but everyone knows how awful it is to try and accomplish something when dealing with poor customer service. Some companies’ customer service can even behave threatening and hostile. Remember, you are going to be with this bank for a very long time and a working relationship is definable by how they are going to treat you.
Will you be required to have a cosigner and does the lender offer a cosigner release?
Getting a cosigner can be a pretty big deal, so if a company has a cosigner release available after a set amount of on-time payments are made, this is a huge plus. A bank may require a cosigner if income or credit score are too low and to insure the loan in case of default.
Does the company charge an origination fee?
In the competitive arena of student loan consolidation and refinancing, some companies nix the origination fee. Other lending institutions will charge a student loan origination fee up to 2% of the total amount of loan. The fee is usually added to the loan amount due and not in upfront amounts. To some people, this doesn’t matter, yet to others they are trimming every dime.
Luckily, there are good reasons to refinance student loans these days. There are so many helpful and available avenues for personal financial reorganization. Startup companies dealing with refinancing or consolidation are competitive and eager to soothe student debt woes.
Be sure to outline your requirements from a lender before you shop around; this way you will know exactly what you are looking for in a consolidation program. Programs are available for almost any part of the student loan repayment process. The kaleidoscope of options can bring tremendous financial relief.