Sallie Mae is a loan company well known by American students. If you are one of them, you might have thought about refinancing your loan in order to get lower interest rates. While this might sound like a good idea, Sallie Mae does not offer refinancing for student loans. Despite these unfortunate conditions, there might still be a chance for you.
How does refinancing work?
Studen loan refinancing happens when you take another loan in order to pay your student loans. Doing this might help you qualify for a better interest rate. This happens because your credit score is improved compared to the moment when you took out your student loans.
Refinancing your private student loan will help you reduce your monthly payments, in some cases by over $250 a month (source). Your payments will be diminished because you are extending the term of your loan.
Another advantage is the fact that you can save money over the life of a loan. On average, a borrower can save over $16000.
Start with your credit score
If you want to refinance your student loan, you should start by checking your credit score. In order to qualify for refinancing you will need to meet specific criteria. In most cases, you will need to have a good credit score, which means that it should be somewhere above 680. Loaners will also look for other things such as your current employment situation.
Your credit score is essential because it will also determine your future interest rate. That is the reason why you should try to improve your score before you refinance your private student loans.
Pick the right lender
When you decide to refinance your private student loans, you should make sure that you choose a right lender. Analyse your situation carefully and see what each lender has to offer. This means that you should take a look at multiple offers before you finally make a choice.
It is up to you whether you want a loan that can be paid off quickly or if you want a longer payoff in order to increase your monthly cash flow.
When you have done your research, you can finally apply for a loan. There should be an online application available, and you should be able to complete it in half an hour at most.
There are a couple of things that you will need to have before you apply for the loan. First of all, you should make sure that you have something that can be used to verify your address. It can be your passport, your driver’s license or something else. You will also need your last tax return, the most recent loan statement, and your previous month’s pay stub.