How to get the lowest interest rates when refinancing education loans

Refinancing student loans can seem complicated. However, it doesn’t have to be. Refinancing is just another option to help you save money by consolidating multiple student loan balances into one new loan. The new student loan has a lower interest rate and reduced monthly payments to help you pay off the loan amount smoothly. However, before you get approved for refinancing, it is critical to develop a strategy. You need to have a game plan that can help strengthen your case and take advantage of the lowest possible interest rate. Here’s how to get started.

• Assess your cost of living

Some cities have a higher cost of living than others. Also, living alone or with a roommate can significantly affect your expenses. You must understand that cost of living is an important aspect for refinancing companies to consider. Therefore, it is best to make lifestyle decisions that can help you free up more cash. You can start by renting a smaller apartment or renting a cheaper one because if you are going to pursue higher studies in a city like Manhattan. Similarly, if you are moving to an inexpensive city, it is best to submit a refinance application at least two months after moving. This is an important step because refinancing companies prefer candidates who have a life budget that allows them to have stable cash flow each month to pay off the loan rather than those who ditch their savings.

• Check your credit score

There are many refinance companies that consider the borrower’s credit score as a criterion. A good credit report helps ensure a low interest rate on both secured and unsecured student loans. You can significantly improve your credit score by paying all bills up front generally. It’s also helpful to cut back on your credit card usage for a few months before applying for a new student loan. There are several websites, like Annual Credit Report.com, that can help you evaluate and improve your score.

• Provide a complete history

Most refinance companies require you to provide a comprehensive view of your educational qualifications and relevant work experiences. So if you’ve studied science, math, engineering, or business at a reputable school, it always helps to include that information. The same is true for practical skills and total work experience because generally it all makes you attractive as an applicant who can continue to make the payments. Also, if you have a job offer on hand, be sure to include the offer letter in your application.

• Show all sources of income

Before submitting your application, be sure to provide information on each and every source of income and not just earnings from work. You can list dividends, bonuses, accrued interest, and any other money-making possibilities. Remember, with a higher income, you will be able to put more cash into the refinancing equation. Therefore, it is helpful to keep proof of income, such as tax returns and declarations of interest. Also, make sure you have a valid driver’s license and your private student loan statements are correct.

• Be flexible

If you have multiple student loans and you’re not getting the best possible rate, it’s best to refinance just a couple of loans. There is a chance that you can take advantage of lower interest rates with a lower refinance balance. You always have the option of requesting the full balance later when you have better sources of income or when you move to an inexpensive location. Adding a co-signer also helps improve your chances of approval.