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Education loan refinancing can seem complicated. However, it doesn’t have to be. Refinancing is another option to help you save money by consolidating various education loan balances into one new loan. The new education loan has a low rate of interest and low monthly payments to help you repay the loan amount without any hassle. Before getting approved for refinancing, it is important to have a strategy. You must have a game plan that can help you strengthen your case and avail the lowest possible rate of interest. Here’s how to get started.
- Rate your cost of living
Some cities have a higher cost of living than others. Similarly, living alone or with a roommate can affect your expenses significantly. You must understand that cost of living is an important factor for companies to consider when refinancing. So it is better to make lifestyle choices that can help you free up more cash. If you’re going to pursue higher education in a city like Manhattan, you can start by renting a small apartment or renting an inexpensive car. Similarly, if you are relocating to a cheaper city, it is better to submit the application for refinance at least two months after your arrival. This is an important step because refinancing companies prefer candidates who have a living budget that gives them a steady cash flow each month to make loan payments rather than those scraping their savings.
- check your credit score
There are many refinance companies that consider the credit score of the borrower as a parameter. A good credit report helps in securing a lower interest rate on both secured and unsecured education loans. You can usually significantly improve your credit score by paying all bills in advance. It is also helpful to reduce your credit card usage for a few months before making the deposit. Apply for a fresh education loan, There are several websites, such as AnnualCreditReport.com, that can help you evaluate and improve your score.
- provide a complete history
Most refinancing companies require you to provide thorough insight into your educational qualifications and relevant work experiences. So, if you studied science, math, engineering or business at a prestigious school, including that information always helps your case. Same goes for hands-on skills and total work experience because in aggregate, it all makes you attractive as an applicant who can continue to pay. Also, if you have a job offer, be sure to include an offer letter with your application.
- show all income sources
Before submitting your application, make sure you provide information about each source of income, not just job income. You can list dividends, bonuses, interest earned, and any other money-making possibilities. Remember, with a higher income, you’ll be able to have more cash in the refinancing equation. Hence, it helps to have income proof such as tax returns and interest statements. Also, make sure that you have a current driving license and that your personal education loan details are all correct.
- be flexible
If you have multiple education loans and you are not getting the best possible rate, it may be better to refinance only a few loans. There is a possibility that you can take advantage of lower interest rates with a lower refinance balance. You always have the option of applying for the full balance later when you have better sources of income or you have shifted to a cheaper place. Adding a co-signer also improves your chances of approval.
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