How To Refinance Student Loans
As you approach graduation the banks will be calling you constantly asking you to refinance your student loans with their bank. Why are all the banks constantly calling about refinancing student loans?
Banks make a ton of money refinancing student loans of course. The refinance student loan process is straightforward and quite easy. There are many benefits to you, the student to refinance student loans upon graduation.
Benefits When You Refinance Student Loans
# 1 Lower Payments
The main reason to refinance student loans is to have a lower payment. Banks allow you to stretch payments up to 20 years. This is huge benefit because most students upon graduation are more concerned about finding enough money to pay rent.
The next item to buy is a new car. After all you have been driving the same Ford Focus since you started college. To make the option of buying a new car a possibility you need to have a lower payment on your student loans. Therefore to refinance student loans into one payment makes sense. Lower payments = better car.
Refinance Student Loans
#2 Interest Can Be Tax Deductible
The IRS allows you to deduct the interest you are paying on your student loans. The IRS allows only a few tax deductions for interest paid on a loan. The most common is the mortgage interest deduction.
Many financial experts recommend you to refinance student loans into one payment and then pay only the minimum payment. The reason behind this advice is the interest on student loans can be tax deductible.
Credit card interest and a car payment’s interest is not tax deductible.
You would be wise to concentrate paying extra money on your credit card debt than on student loan debt. Most credit cards are at a much higher interest rate than a student loans. In addition credit cards do not offer a fixed interest rate. Make it a priority to eliminate credit card debt.
#3 Builds Your Credit Score
Making your student loan payments on time is crucial to building up a good credit score. You may not realize this, but the government and banks do report your payment history to the credit bureaus.
There are three credit bureaus: Equifax, TransUnion and Experian. All three receive data regarding your payment on your student’s loans. You can view all three credit reports at www.annualcreditreport.com for free
You should to take your student loan payments seriously because it can affect your ability to buy a car and a house. I’ve heard about a couple that was declined from purchasing a home because they had a small student balance in collections. They had paid off the loan early, but still had a small balance due to interest. They did not pay much attention because they had thought the loan was paid off. Eventually the account was cleared up, but they still had to wait nearly 6 months until their credit score improved to an acceptable number. How you pay your student loans can help you get approved for loans or declined for loans.
#4 Save Thousand in Interest
The final reason why you should refinance student loans is the amount of money you can save in interest. Once you graduate from college chances are you will have an array of student loans at different interest rates. By refinancing your student loans into one payment you will usually receive a lower interest rate overall. A lower interest means more of you monthly payment will go to principal than to interest. This can lower the amount of time you are paying on all your student loans. I mentioned early by refinancing student loans into one payment you will also save in the total you pay each month to your bank.
Where to Refinance Student Loans
As you approach graduation banks will be searching for you to refinance your student loans. So do not worry about finding a bank. The process is simply and painless. What you want to do is go to the Internet and find out the current rates banks are offering to refinance student loans. Once you complete step is you can then decide which bank is offering you the best terms and conditions i.e. interest rate and length of loan.
Graduation is an exciting time for all, but with graduation comes responsibility. Take your student loan payments seriously. You do not want to find out two or three years down the road you do not qualify for a loan due to a student loan being in collections. Go refinance your student loans into one payment when you graduate. You will save money and interest over time.