Let’s just come right out say it: some of the jargon associated with refinancing your student loan can be tough to get your head around.
But here’s the good news: refinancing isn’t nearly as complicated as you might think. In fact, it’s possible to apply and even get a conditional acceptance in less than an hour.
That’s time well spent, when you consider that you’ll come away with benefits like lowered monthly payments and lower interest rates.
A time investment of 60 minutes can save you literally thousands of dollars? That’s a pretty good deal.
Ready to get started? Here’s what you need to know.
Make an apples-to-apples comparison
There are a lot of lenders offering student loan refinancing. So how you do choose the right one?
It’s actually pretty simple. Create a basic spreadsheet so you can get a side-by-side view of different banks to compare interest rates, loan terms, and other factors.
Don’t feel like making a spreadsheet? No problem. Check our Best Banks chart for an easy comparison.
Give yourself a time limit
Any time a lender performs a credit check on you, you might get a ding on your credit score for a credit inquiry. The same holds true when you’re researching your refinancing options.
However, keeping all credit inquiries within a 15-day period can minimize the impact on your credit score. Why? Because multiple inquiries over a limited amount of time indicate that you’re shopping around for a specific reason. On the other hand, spreading inquiries over a period of several months may make it seem like you’re constantly searching for additional credit.
Another reason to time-box your search: interest rates may change quickly. You don’t want to lose out on a great rate by waiting too long to decide.
You can minimize the number of credit hits on your account by not applying to lenders who aren’t a good fit.
Find out what lenders expect in terms of credit history, employment records, and income. If you can’t easily find this information on the company’s website, pick up the phone and call them. In fact, finding a reason to call a lender before you apply has an additional benefit as well …
You can learn a lot about a company through their customer service representatives. A quick call can provide insight to how responsive and knowledgeable the customer service reps are. Remember, when you settle on a company to do business with you are starting a long-term relationship. Make sure the company culture and values work well with what you need.
Start your search for a lender by checking out our picks for the best banks for student loan refinancing.