For many student loan borrowers, refinancing is a strategic move for getting out of debt fast. It can lower your interest rate while simplifying your monthly payments.
But how can you tell if you’re eligible for student loan refinancing? And how long does the refinancing process actually take?
Even if you’re undecided about refinancing, it’s easy to browse offers with no impact on your credit score. Here’s a step-by-step guide on how to refinance student loans.
1. Check rates with multiple lenders
When it comes to student loan refinancing, you should always window shop. You don’t have to commit to one lender or offer. In fact, you can browse multiple offers without any risk to your credit score, and you’re under no obligation to choose one unless it would benefit you.
There are a variety of banks, online lenders, and credit unions that refinance student loans. And you can enter your information and check rates in just a couple of minutes. Lenders such as SoFi, CommonBond, LendKey, and Citizens Bank offer competitive interest rates, transparent practices, and excellent customer service.
Compare refinancing lenders to see which would be best for you. Then check your rate by visiting the lender’s website and entering some basic information. Most lenders ask for the following:
- Degree and university
- Total student loan debt
- Monthly housing payment
Different lenders might have slightly different requirements, but the gist will be the same. You might also be prompted to create an account so you can revisit your information later.
After entering this data, the lender will instantly run a soft credit check. Again, this check won’t impact your credit score at all.
If your income and credit score meets the lender’s eligibility requirements, you’ll see a range of offers. Most lenders offer loans with five, seven, 10, 15, and 20-year repayment terms.
You’ll also see variable and fixed interest rates. Variable rates can fluctuate with the market, while fixed rates stay the same over the life of your loan. Variable rates tend to start lower than fixed rates, but they could increase over time.
Generally, it’s safer to choose a variable rate if you can pay off your loan fast. If you have a long repayment term, going with a variable rate carries more risk.
Step 2: Choose a lender and your loan terms
If you find some good offers, it’s time to choose a lender and a loan. Most borrowers go with the lender that offers them the lowest interest rate. Do the math with a student loan refinancing calculator to see how much you’ll save with a new interest rate.
You can also compare loan terms to help you choose a five-year, 10-year, or longer repayment term. A longer term can help lower your monthly payments, but it could also mean more accrued interest over the life of your loan.
If you need to free up more of your monthly income, a longer term could be the way to go. But if you can manage higher payments, a shorter term will save you money on interest and help you get out of debt fast.
Besides interest rates, customer service might also be a major factor in your choice. Online reviews offer good insight how well a company treats its customers. If that’s an important element to you, do your homework before selecting your lender.
Step 3: Have your documents ready and fill out the application
Before locking in your new interest rate, you need to submit a full application. You’ll upload documents, such as loan statements and proof of income. Plus, you’ll consent to a hard credit check at this point.
Here are the main documents and information that most lenders require:
- Proof of citizenship (Social Security number or government ID number)
- Valid ID number (driver’s license or passport)
- Proof of income (pay stubs or a job offer letter)
- Official statements for all your federal and private loans
If you’re applying with a cosigner, you’ll also provide that person’s information. You’ll upload any supporting documentation to your online account with the lender.
If anything is missing, the lender will notify you. You can also call or chat with customer service if you have any questions.
Feel free to call your current loan servicers if you’re not sure where to locate full statements. Statements need to show your original balance, date of disbursement, and full history of repayment.
Step 4: Keep paying your loans as you wait for approval
Even though you can browse initial offers in an instant, you might have to wait a few weeks for full approval of a refinancing application. The process usually takes two to three weeks before you’re up and running.
In the meantime, it’s very important that you don’t stop paying your current loans. Only stop paying your current servicers when you get the green light from your new lender.
Once you’re approved, set up automatic withdrawals from your bank account so you don’t miss a payment. Many lenders offer an additional 0.25% discount on your interest rate when you set up autopay.
Refinancing is a strategic way to get rid of student loan debt
If you started today, you could have a refinanced student loan in just two to three weeks. Now that you know how to refinance student loans, it will only take a few minutes to check your rates and compare lenders.
If you find a good offer, you can submit a full application. Once you’re approved, you can say goodbye to your old loan servicers.
Plus, your new interest rate could save you lots of money over the life of your loans. As long as you’ve thought through all the pros and cons of refinancing, it can be a smart way to get out of student debt faster.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Rates (APR)||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!|
|2.58% - 7.25%||Undergrad & Graduate||Visit SoFi|
|2.99% - 6.99%||Undergrad & Graduate||Visit Laurel Road|
|2.57% - 6.32%||Undergrad & Graduate||Visit Earnest|
|2.57% - 6.49%||Undergrad & Graduate||Visit CommonBond|
|2.56% - 7.82%||Undergrad & Graduate||Visit Lendkey|
|3.11% - 8.46%||Undergrad & Graduate||Visit Citizens|
Student Loan Hero Advertiser Disclosure
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.