Ask Jeni: Refinancing & Extra Payments
Ask Jeni is a service offered to tuition.io users that lets real borrowers ask Jeni Burckart, our student loan coach, questions about their student loans. Here’s an example of one of those questions.
I currently pay almost $1,300 a month on my student loan. I have just over $62,000 in loans left to repay, my interest rate is 5.35%. I’m going to add another $1,000 to my monthly payment. Is it smart to try and refinance since I will be making an extra payment each month, could I lower my interest rate?
If your goal is to get out of debt quickly by making extra payments each month, I think refinancing might be a good choice for you. Interest rates in the market are going up but you still might be able to get a lower rate.
The best interest rates go to borrowers with good to excellent credit scores, high incomes relative to debt, and stable jobs. If that sounds like your situation refinancing is worth looking into.
You can use the individual rate estimators on different refinancing websites or you can use the Credible marketplace in the T.io portal. Here’s a list of the refinancing companies that have offered the lowest interest rates in the past. Earnest, ELFI, CommonBond.
If you find a good interest rate after comparing a few companies; I would submit a formal application to 2 of the companies with the lowest rates. That way you can potentially be approved by two competing companies. Often if you ask, and send over the competing offer both companies will compete to lower the interest rate a little further.