Student loan refinances a good option if you want to make the repayment easier with lower interest rates. You can change the loan terms based on your present financial conditions. And these conditions are generally improved since the graduation from the university.
You are a more reliable borrower for lenders with increased affordability for the loan. However, not everyone graduates from a business school to get the best knowledge about loans and banks. Here are the essential steps involved in the refinancing process that requires your attention –
Debt Consolidation v/s Student Loans
Student loans refinancing may help you reduce the stress of the loan for education only. It will not help you repay the heavy-interest loans that are derailing your monthly budget. A debt consolidation loan is a better alternative if you have more liabilities other than student loans.
You can apply for short-term loans in Ireland to repay the heavy-interest loans first. This will also help in finding a better deal for student loan refinancing. First, consider the financial products that may help your current situations more than loan refinancing.
- Find the Lender
Many lenders in the market provide student loan refinancing to eligible borrowers. Their terms, interest rates, charges, and customer service are different from each other. Some may offer lower interest rates, but you cannot rely on their customer service.
You should search the internet for different terms the lenders throw at you. They might add some unreasonable charges to increase the overall cost of the loan even after low-interest rates. It will take some time to find the best student loans in Ireland after comprehensive research.
- Consider the Cost
As mentioned above, the lenders may add some fees while processing your loan application. These fees can increase the overall cost of the loan more than the current agreement. Therefore, you should ask the lenders for the fees in advance before signing the offer.
Your present lender may charge some foreclosure fees as well for the loan amount. Add it to the overall budget of the loan to compare the two options. Also, check the loan terms if you have signed on the foreclosure fees or not before agreeing to the current lender.
- Check the Credit History
Your credit history contains every financial detail a lender needs to assess your financial behaviour. It contains your present and past debts and repayment history. The missed payments and defaults will reflect poorly on your loan application.
Thus, you should focus on credit history if you want to refinance the student loan. The past mistakes will stay on the history for 4-5 years. You can explain the situation to the representative of direct lenders if you have some genuine reasons.
The credit history may have some errors or mistake that can cause rejection of your application. You should check it every month to get the error resolved before it causes any damage. Contact the concerned authority for the process of resolving an error on credit history.
- Compare the Offers
Once the application is approved, the lenders will come with their best offers for your profile. You need to find the best among them, considering various factors. The interest rates and tenure are two of the most important factors that should drive your decision.
You can select a shorter term if you want to pay less for the loan. Also, it means the debt will get repaid earlier than the initial agreement. However, the longer-term will ensure the instalments are easily manageable.
- Variable Rate v/s Fixed Rate Loan
Lenders will offer two interest rate options for the borrowers to decide – variable and fixed rate. These two options have their pros and cons with different impact on your financial condition. While the fixed rate is a safer option, you may save some money in the variable rate.
The variable rate loans decide the interest rates based on the present economic condition of the country. It will start lower than the fixed interest rates in almost every case. Contact the lender for the maximum possible interest rates with the variable-rate to make a final decision on affordability.
- Keep an Eye on Interest Rates
There is no limit to the times you can refinance the student loans to get a better deal. Thus, you should keep an eye on interest rates to take advantage of any drop. Go through the whole feasibility process again to find if it makes any sense.
Your credit history will also improve with time if you don’t miss payments anymore. This will also help in finding a better offer for refinancing.
To sum up, student loan refinancing requires a lot of research and market exploration if you want the best offers. You can contact a direct lender if you want faster processing of the application. The banks can take days to a few weeks before they send your application to the underwriters.