Before you sign a loan to refinance student debt, there are a few steps you should take first.
Check your credit report. To get the lowest interest rate for student loan refinance, you may need to have a “Good” or “Excellent” credit score and a certain debt-to-income ratio. Address any errors on your credit report, and if possible, pay down any debt you have.
Have proof of employment or an employment offer. You will be more likely to get the best rates on student loan refinancing if the lender sees you have a reliable income.
If you’re unable to qualify for a loan with a great interest rate, consider having a cosigner sign the loan with you. Eventually, the cosigner may be removed from the loan.
Compare student loan refinance rates to make sure you get the best rate before you agree to the loan. Here are some things to consider when you compare:
- Look at each loan’s Annual Percentage Rate (APR) to really determine if you’ll save money. Some loans may get you a lower monthly payment, but the loan may be stretched out over a longer term, meaning you’ll end up paying more in the total.
- Find out if a variable or fixed interest rate is best for your new loan. Variable rates can be lower, but they may increase over time. If you think rates will stay low and you can pay off a lot of the loan quickly, then a variable rate may work to your advantage.
Finally, apply to more than one lender to increase your chances of getting approved for a good loan!