Recipients of student loans are often at a loss when it comes to post-graduation financial activity. Deciding whether one should consolidate or refinance loans can be quite arduous and is a task that should not be taken lightly. There are two basic types of student loans: federal and private. Federal loans are granted through the government and are relatively easy to consolidate through the Federal Direct Consolidation Loan Program. However, private loans are another story entirely. Deciding when and how to refinance private student loans can determine the difference between possible extra payments and extended payment periods.
Learning the ins and outs of how to refinance private student loans doesn’t have to be a difficult chore; arm yourself with up-to-date information, learn commonplace financial expressions, and review conventional terms and conditions associated with your loan type. Laying the proper amount of groundwork will adequately prepare you for the road ahead.
Experts are in agreement that now is the time for borrowers to refinance; this especially applies to borrowers whose loans originated more than five years ago. Based on their combined knowledge, financial specialists concur that refinancing private student loans at today’s rates will save borrowers thousands of dollars.
Borrowers tend to refinance for one of two money related issues: either the borrower has fallen upon financial hardship and is looking to prevent or curb damage to his credit history, or he simply has the opportunity to repay a lower amount of money than was listed in his original recompense plan. Whichever way, the borrower can stand on firmer financial ground after learning how to refinance private student loans.
Of course there are other reasons to refinance. Doing so greatly reduces the amount of paperwork a borrower must maintain – especially if he has multiple loans through multiple lenders. Also, a single monthly payment is much easier to remember than several payments due throughout a billing cycle.
When first attempting to decide how to refinance private student loans, keep in mind that you are dealing with professionals. Although it would be nice to place complete trust in a financial guru’s hands, it is wise to stay on top of these financiers to ensure that you are being treated fairly and receiving the best deal possible for your situation. Be sure to review payment schedules, penalties, fees, benefits, and other related terms and conditions before signing any paperwork.
Although a borrower may be considering when and how to refinance private student loans, he must not only contemplate how the current economic climate will affect his interest rates, but also how his personal history will come into play. Interest rates of refinanced loans are mainly determined by the borrower’s FICO score; this number is based on several factors that predict how likely the borrower is to fulfill his loan repayment obligations. Be sure to pay monthly bills in a timely manner and review your credit report for errors and possible conflicts at least once a year.