Loan refinancing isn’t new in the markets across the US. But, unless you weigh the options of refinancing carefully, you may be duped by a lender easily. Having said that, we mean under the guise of refinancing and on the promise of reducing your interest payout burden, you may land up paying more than before towards the interest. Therefore, it is important to know what the best student loan refinance is all about.
To begin here with the right mindset, please note that there is a difference between debt consolidation and the student loan refinancing. For instance, federal student loan consolidation is feasible only on the federal loans and not the private loans. In the case of loans consolidation, the new rate of interest is decided on the weighted average interest rates of all the loans put together. In other words, there remains a potentially high chance of losing the original interest rate benefit when you choose to consolidate the loans.
However, the possibility to cut back on the interest payout per month through refinancing cannot be ruled out. Play safe here especially with the refinancing through the federal loans consolidation.
Why choose loan consolidation:
- The fixed interest rate saves you from every month’s headache on the loan payoff amount.
- No need to keep tracking multiple loans and its’ individual payout.
- Opportunity to make flexible payment based on one’s financial condition.
- Convenient to pay all the loans with a single instrument such as the check.
Why student loan consolidation:
- Student loan consolidation is unique that results in savings.
- Students automatically qualify for the loan consolidation irrespective of their credit scoring
- No maximum limit on the loan amount.
- Interest paid on the student loans can be used for the tax rebate.
What to do if all loans are from a single source:
To be honest, you are left with little choices if sourced all the loans from a single place. It is, therefore, advisable for taking loans from different sources that allow somewhat diversity in its’ basics. In other words, going ahead with the consolidation of all loans sourced from a single place doesn’t bring satisfactory results.
Is consolidation of the student loan allowed with the spouse?
Like many, this may be your question too after the marriage with a view to keeping the outgo low on the interest. But, such a consolidation is no longer allowed unless you have a student loan before 2006. However, such a consolidation isn’t desirable either since the spouse has to bear with the partner’s liability despite his/her death.
The best time to consolidate loans:
There is no standard practice on the loan consolidation timing. You have to be a little market savvy. For instance, when you feel the interest rates are low, you can consolidate loans to fix the rate. You can extend the period of loans and can effectively lower the interest payout.
In a nutshell, the success of the best student loan refinance is mostly case specific and any generalization here might just be unwanted.