Shopping For the Best Interest Rates Can Save Thousands on Your Student Loans

If you feel like you’re paying too much on your monthly student loan check, you might be right. Experts estimate that 8 million Americans could qualify for lower the interest rates compared to their current student loans. In the old days, getting a new loan was hard work, but today things have changed dramatically for the better. The process is much faster and could save you thousands of dollars in the end.

The How and Why Behind Refinancing

Refinancing your student loan means getting rid of your current loan and replacing it with a new one with a lower interest rate. This basically gives you two options to pick from:

  1. Pay less each month but keep the same payment term.
  2. Pay the same (or more) each month and pay off your loan faster.

Either way you can save money. How much? Statistics show that borrowers can save an average of $18,600 when they refinance their student loan.

How to Shop Around

In the past, refinancing your student loan wasn’t so easy. You had to contact each individual lender separately and fill out forms for every contact. The process was time consuming and frustrating to say the least. Also, there was no guarantee that your loan application would be approved, and nobody likes rejection.

Today, things are much smoother. Thanks to the Internet, you can access an online multi-lender marketplace that puts you in touch with many lenders at once. After answering some simple questions about yourself online, you receive prequalified rates within minutes. No more going door-to-door wasting your valuable time. Plus, since the lenders compete for your business, they offer the lowest rates they can.

Still No Guarantee but Don’t Worry

Even web based lender marketplaces can’t guarantee that you’ll be approved for refinancing. In fact, 68 percent of those who are eligible to refinance are turned down by more than one lender. Still, the online method works great since you contact may lenders at once. This increases your odds of getting approved.

Credit Score Concerns

If you’re wondering if this process affects your credit score, don’t worry. When you use an online lender marketplace, you authorize a “soft” credit inquiry that doesn’t affect your credit score. You still get a bunch of prequalified rates to choose from. Now, if you see a rate that looks good, you move forward with that particular lender. This means you authorize a single “hard inquiry” that may affect your credit score slightly by five points or less. This is much better than the old method of going from lender to lender which could trigger a hard inquiry from every lender instead of just one.

Get the Best Rate

Online platforms speed up the process of shopping around for student loans. Don’t’ put it off any longer. Take advantage of the tools available and begin saving money.

 

Posted in: Personal Finance

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