By refinancing, you can get a new loan with a fixed interest rate and guarantee a consistent rate for the life of your loan. In addition to getting a lower rate, you can choose a new repayment term.
By opting for a longer repayment period, such as 10 to 20 years, you may be able to reduce your minimum payment. Keep in mind that refinancing has some drawbacks, though.
It will have a fixed interest rate based on a weighted average of the loans you consolidate.
Consolidation simply makes keeping track of your loans easier since you’ll have just one loan to manage and one payment to make each month. If you refinance, you can consolidate several loans into one.
That can help give you more breathing room in your budget.
You’ll pay more in interest over the length of your new repayment term, but an income-driven repayment plan can make keeping up with your payments possible on a small salary. If you have older federal loans, you may have some with variable interest rates.
Lowering your rate can save you a lot of money over time and allow you to pay off your loan faster. If you currently have private loans, you may have a variable interest rate.
Use our calculator to see if refinancing can save you money. That means your interest charges could increase over time. If you’re on a tight budget and your loan payments eat up a big chunk of your salary, refinancing can help.