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If you’ve attended college in the United States, then it’s not uncommon to graduate with student loan debt. In 2018 alone, as much as 70 percent of students who attended college graduated with student loans. Whether you took out a large amount of debt or have a few student loans to pay off, no one enjoys paying a debt, especially when paying extra for interest. Luckily, refinancing your student loans gives you the ability to reduce your debt. But it’s important to know the best time to consider refinancing your loans. Here’s what you should know:
When Interest Rates Decrease
One of the best times to refinance your student loans is when interest rates decrease. If you notice rates lower than the current interest rate you pay, then it’s time to consider refinancing your loan. The higher your interest rates, the more you pay over time. So, taking advantage of lower interest rates can work for you in the long run.
During the Right Time (for You)
Another important time to refinance your loan is when you have better credit than you previously had. With a higher credit score, you will be able to get lower interest rates more easily. Online personal loans from companies and services, such as Sofi, simplify getting lower interest rates by offering competitive interest rates and flexible payment options. For instance, you can use these services to reduce your interest rates and determine whether a variable or fixed interest rate is right for your needs.
But Sooner is Usually Better Than Later
It’s important to understand the advantages and disadvantages of waiting to refinance your loans, especially since the time can affect how much you spend in total costs. The main benefit to refinancing your loan early is that you can save more over the life of the loan when you get a lower interest rate. But if you wait until you have better credit and a stable income during the middle of your loan payments, you may get an even lower interest rate. You can also wait to refinance your student loans later, but waiting too late carries the disadvantage of costing you more over the life of the loan.
Deciding when to refinance your student loans is a personal but important decision. So, it’s crucial to assess the advantages and disadvantages of refinancing your loans. By considering your current financial situation and how refinancing helps you reach your goals, you can better determine the best time to refinance your student loans.