How to Choose the Best Student Loan Terms for Refinancing


Low interest rates have made student loan refinancing attractive to many borrowers, but it’s important to compare loan rates and terms to find the best deal. (iStock)

If you want to pay off your student loans faster or simplify the repayment process, a student loan refinance may be the solution for you. A loan refinance is when you get a new loan from a private lender and use it to pay off one or more existing student loans. It can consolidate multiple debts, lower your monthly loan payments, and potentially save money, as long as you choose the best student loan terms for refinancing.

With the Federal Reserve setting the current interest rates at which banks can borrow at close to 0%, many refinancing companies are offering unprecedented lending rates. But you will need a good credit score and proof of income to qualify. To compare rates and terms with several private lenders to make sure you’re getting the best possible loan rate, check out Credible.

Credible also offers a handy rate table that makes the student loan refinancing process easier – just enter your loan amount and your estimated credit score to see the prequalified rates.

When you compare loan rates, there are a few key questions you need to keep in mind to make sure you get the best possible deal on your refinance loan.

How to Choose the Best Student Loan Refinance Deal?

There are three simple things you can do to make sure you choose the best student loan deal for refinancing.

1. Determine which loans to include in your refinance: Typically, you’ll want to include only private loans, as refinancing Federal Student Loans would require you to forgo some important benefits, including the ability to change your loan repayment options and the possibility of a discount. student loan.

2. Shop around and compare lenders: Different private lenders have their own eligibility criteria. Rates can vary widely among themselves, so get quotes (watch for when rates drop) from multiple private lenders to see which one is offering you both the lowest loan payment and the lowest total loan costs. Find your rate now.

3. Calculate your potential savings: Credible’s Student Loan Refinance Calculator can help you get a feel for what your new payment would be with each private lender.

In the end, the best way to choose the right student loan refinance deal is to get quotes from several lenders and see which one best suits your goals. Look for a lender that offers low rates, a loan repayment schedule that isn’t too long, and a monthly payment that easily fits into your budget. Visit Credible today to find a student loan refinance deal that’s right for you.


Is It Worth Refinancing Student Loans?

When comparing rates, think about what you hope to accomplish by refinancing student loans, and determine if it’s worth it. Here are some of the most common reasons to refinance:

  • Lower the monthly payment of your loan: You can give up your loan repayment by getting a lower interest rate, refinancing for a longer repayment term, or both.
  • Reduction of total interest charges: Lowering your interest rate can lower the cost of borrowing. However, you will need to make sure that you don’t lengthen your loan repayment term too much, as you might increase the total costs in doing so as you will end up paying interest over a longer period of time.
  • Simplify the refund process: You can take out a new refinance loan to pay off several existing loans, thereby reducing the number of monthly loan payments.
  • Pay off loans faster: If you shorten your loan repayment time with your refinance loan, you can get off debt sooner and lower borrowing costs by paying interest for less.

The decision you make on which loan is right for you and whether it is time to refinance will depend on your goals.


What are the advantages and disadvantages?


  • You can reduce your monthly loan payment.
  • You can reduce your total costs.
  • You can simplify the repayment process if you have one loan to manage instead of several.

Credible can walk you through all of these steps and help you understand all of the benefits.

The inconvenients

  • You could end up paying more over time if you lengthen your repayment period (but this is easily avoided by choosing a loan with the same loan term or a shorter term).
  • Not everyone can qualify for a new loan refinance at a great rate. If you find yourself in this situation, a co-signer could help you get approval.

Refinancing federal loans, on the other hand, has significant drawbacks, including the abandonment of generous deferment or forbearance policies; losing the ability to change your repayment plan as needed or switch to income-oriented payment plans; and forfeit any chance of canceling the loan. In general, you don’t want to refinance federal loans unless you are sure you don’t need the special benefits or protections they offer.


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