If you're like me and hopelessly drudge through life hoping to one day pay off our capitalist overlords for the mediocre education they have forced upon us, or if you just need to see a light at the end of the student loan tunnel, you may be asking yourself; "Do I need to refinance my student loans and when's the best time?" Worry no more! In this article we will go over the current student loan market and when the best time to refinance is based on current rates and where the industry expects to go from here. So lets dive right in!
Student loans can be a source of anxiety and all around bad feelings for a lot of people. Personally, I have more student loans than mortgage, but that doesn't mean that we should just let them go and accrue interest with no reign, no! The place to start if you are just starting out is to find out what the current interest rate on your loans is, there may be no need for you to refinance. Go to the online portal for your student loans and root around for the interest rate. Try to find a monthly statement showing the principal and interest, it may be useful later. If you've got a great rate already and the estimates you are getting from loan companies and banks are all higher than your current interest rate, sit on it. But if you need to cut that huge rate down to size, keep reading.
Most loan providers are gonna go off of your credit score, income and other credit indicators to decide if you are credit worthy. The best way to make sure that you aren't just wasting your time is to check your credit score beforehand. There are so many ways to do this today but my favorite is Credit Karma, I have been legit using it for years and it has always been one of the most helpful tools in my financial arsenal. If you have a score below 650 spend some time working to bring your score up as much as you can. Pay down old debts, call collectors and arrange plans, anything you can do to get that score repaired and get yourself back on track. If you plan to apply for student loan refinancing you are going to want your score to be higher than a 660 or 670 to really qualify for most loan providers and the higher the better.
Another important factor is your income. The income requirements vary widely from company to company but generally as long as you are employed and making enough to support yourself you should be able to find a loan provider that will work with you to get your loans managed. There are some tricks that I can pass along though. Loan providers like to see wage income that is in excess of your monthly expenses, meaning that they like for you to have money left over at the end of the month to pay them with. If you are struggling to find a loan provider that will give you a loan because your income is too low check with the aggregators and sites like Credible.com that will put out applications to lots of different providers so that you can find one that meets your requirements and lifestyle.
If you've gotten this far I'm assuming that you probably already know everything I've told you. So here is something you may not know, you may be able to find out if you will be able to get a loan without even getting your credit dinged or even showing it at all. Some companies can do what's called a soft credit pull. A soft credit pull does not affect your credit score but it can tell the loan companies everything they need to know about your history and creditworthiness. If all goes well you will get offered a refinancing loan at a specific rate and term, this is where the fun part comes in.
Lets say a fictional friend goes to a company, company A, and get offered a 3.5% APR, which is better than the 4.3% they currently have, most people would jump at the chance to lower their monthly payments with a lower rate, but not so fast! Your friend may be able to go around to other companies, shop around, and get a better offer from company B for instance for a 2.9% APR. And you may think that is the end. But they can still take that rate back to company A, tell them that they were able to get a better rate through company B, and they will try to match that rate, or in some cases even do better! In the end our fictional friend went from a 4.3% rate to a 2.75% and all they did was talk to a few people and fill out 2 applications.
A couple closing pieces of advice, work with the company, they want to help you as much as you want the loan, and keep your head in the game, this is your money we are talking about!
