Whenever you’re wishing to lower your interest rates & save some money, it’s favorable to use student loan refinancing. Though, refinancing is not the best option to choose from. So before taking a decision, weigh the pros & cons of refinancing carefully.
Refinancing basically means converting existing loans into newer ones. Take a glance to understand the positive & negative of refinancing student loans.
Pros of Refinancing Student Loans
- The lower interest rate for better savings
Refinancing works on your merit, so whether you’re qualified for a low interest will depend primarily on this factor. That’s a great deal because you’re paying less overall. Once your credit score & debt to income ratio gets improved, you wouldn’t have to agree to a high-interest rate. This way you can choose your lender comfortably & compare options to find the best one.
The rates may vary according to market influences for timely repayments.
- Single monthly payment with a chosen lender
Every time you take a loan, you either choose a different lender or a different loan package altogether. This way it’s difficult to keep a tab on your debt if they keep doubling. So, it’s best to have a single monthly payment through the refinancing option to the lender of your choice. Refinancing grants the chance to group all your loans for better service.
- Apply with a co-applicant to get lower rates of interest
The criteria for refinancing are difficult to meet provided you’ve established a brilliant credit score. Many lenders already provide the option to take a loan as a co-applicant. If your financial capacity isn’t too strong, then a co-applicant help you refinance your loans.
Cons of Refinancing Student Loans:
1. You lack the secure loan options:
There are a few loan companies that provide the ability to stop repayments when you’re either laid off or meet an unprecedented financial crisis. However, these private lenders do not provide secure options at your service.
If you’re risk-averse, it’s better to stick to secure investment options & loans. This will save you from the pressure of exhaustive repayments. Refinancing companies do not provide leniency in service payment.
2. You are required to meet tedious eligibility criteria
When you consider refinancing options, you need to specifically meet all strict eligibility criteria.
Mostly, the top lenders offer student loan refinancing have requirements to meet, this can turn out tedious. Also, it requires the borrower to have a strong credit standing in the market. This could be as high as 700-750 to qualify. As elaborated before, you could take on a co-applicant who meets the said criteria. Here, you can consider Home Credit Personal Loans which is 100% online & follows simple eligibility criteria. The loan amount offered from Rs. 25,000 to Rs.2,00,000 at processing fees between 0-5%.
3. You’re coupled up into a permanent plan
Unlike other personal loans, you’re permanently locked up in a refinancing plan. Refinancing is completely offered no flexibility to make a change. Once you’ve opted for a refinanced loan, it’s not possible to make a change to the repayment schedule. You could make changes at the beginning of the tenure, though.
Always use a refinancing student loan to assess & compare the available options. It’s great to consider the pros and cons of refinancing student loans before landing at a concrete decision.
Remember to make a decision keeping through check & care under your lap. However, if you’re a borrower with a good credit score, refinancing can turn out extremely helpful in easy repayments.
