Technically, refinancing is a way to extend your loan deadlines so you can easily pay them off. Refinancing pays off the old loan and renews the debt terms. It can be a useful tactic to pay debts fast, especially for students.
If you are currently in a pinch with your debts and are looking for a way to deal with them, then this might be a solution to your problem. However, where do you start, and what do you need to do? Luckily, you can follow these steps when applying for student loan refinancing.
1. Do some window-shopping. Compare and contrast several offers available.
Applying for an offer does not mean that you need to dedicate yourself to just one. Several offers are available in the market; in fact, most banks, online lenders, and credit unions offer student loan refinancing options. You can browse different offers and bargains without risking your credit score. Compare to find out which is the best for you.
If you find something that you think is good, visit the lender’s site to see their rates. Though requirements might slightly differ for each lender, the general idea should likely be the same. Most would ask you your name and address, your degree and university, your total student loan debt and income, and even your monthly housing payment.
Your lender will run a soft credit inquiry using your given data. If your credentials meet the eligibility requirements, your lender will present a range of offers to you. Most offers have loans with repayment terms ranging from five to twenty years. They can also offer you variable and fixed interest rates. To note, variable interest rates are rates that vary over time. They also start with lower values, though rates can probably increase over time. Fixed interest rates, on the other hand, are “fixed” throughout and until your loan’s maturity date.
In addition, customer service largely contributes to a borrower’s choice. There are reviews available at Gadget Review that can give you an idea how each company works. If you think that this matter might also be important, you might want to include this to your background checks.
By this time, you should already have a gist of which offers to take up. Borrowers commonly pick lenders with offers having the lowest interest rates. Thus, using a refinancing calculator might help you see how much you could save with each interest rate.
Usually, applying for a loan with variable interest rates is the best course of action if you think you can repay it fast. However, paying off loans with longer repayment terms can be troublesome since their interest rates can rise over time.
Debts with longer repayment terms also have their perks. You have lesser amounts to pay monthly, although it also means that you need to face a larger accumulated interest. If you really need most of your monthly income, this might be the best way to go.
3. Prepare and complete all necessary documents AND the application form.
Of course, completing and submitting requirements, most especially the application form, is necessary. In the process, you might need to upload documents and even request a consent for hard credit checks.
Along the application form, most lenders usually require borrowers to submit the following:
Proof of Citizenship
Valid ID Number
Proof of Income
All Official Loan Statements
Cosigner’s Credentials (ONLY IF you have a cosigner with you)
Nevertheless, they will notify you if you missed to submit anything. In addition, the company’s customer service could entertain any questions that you might have. Feel free to approach them for any clarifications, to ensure smooth processing, and to avoid unnecessary problems.
4. Don’t forget to pay your loans!
Submitting all the prerequisites does not relieve you of your responsibilities; you still need to pay your debts. Keep in mind that the company has to process your application before giving a full approval of refinancing your loan. The processing usually takes nearly a full month. Thus, you still need to pay off your loans during that time.
You can only stop paying if your lender says so. Read more about this at Gadget Review’s website https://gadget-reviews.tumblr.com/
Once approved, your lender could recommend you to establish automatic withdrawals. Many lenders give discounts on interest rates if you pay automatically.
Refinancing has its own advantages and downsides. Having one could actually help you finish paying your debts faster. Just remember: know the basics. This will help you get through this challenge without a scratch.