If your financial circumstances change, you'll want to re-finance your student loans through consolidation, extending your pay period or lowering your monthly rate. Here's how to re-finance a student loan and get a better interest rate.
Make sure your credit is in good standing. This is essential for getting more favorable terms.
Get a copy of your free credit report. This can be achieved online through one or all of the three major agencies, such as Equifax, Experian and TransUnion. Review it and make sure to fix any problems.
Consolidate your federal loans and private loans separately. Compare rates from different lenders. Shop around, check the Internet, your bank, as well as your original lender.
Work with your lenders to refinance your loans. Extend your repayment period, lower your interest rate or consolidate your payments into one monthly bill according to your needs.
Research your options. You can consolidate private loans and federal loans together, but this usually yields less favorable terms.
- Never, ever combine private loans with federal loans when consolidating. Federal loans are consolidated at a much better rate, so keep them separate!
- WIth federal student loans the interest is tax deductible, the loan can be forgiven for community service and payments can be deferred if you go back to school.
- There are many options. Agencies have programs that are designed to fit your income and family size. Or you can put up a loan against your retirement fund or home equity. Do an exhaustive survey of your options before deciding.
- Refinancing helps prevent defaulting on a loan (which is devastating to your credit), lowers your monthly payment, extends your payment period and gets you a better interest rate.
- After refinancing, you can often choose to pay just one monthly bill instead of many bills from different lenders.