How to get the lowest student loan refinance rate
Rates on a student loan refinance loan are very low right now. Find out if you should refinance your loans to save. (iStock)
Student loan borrowers have an unprecedented opportunity right now to secure a student loan refinance at an extremely competitive rate. If you qualify for a refinance loan at the historically low rates that are currently available, you may be able to substantially reduce your payment and make paying off your loan less expensive over time.
See if you can secure a lower rate by refinancing your student loans today. Just plug in some of your information (like your current student loan balance and credit score, etc.) to find your rate within minutes.
Before you decide whether you should refinance your student loans, it's helpful to research the current rates available as well as to learn some of the steps you can take to maximize savings that come from refinancing student loans.
4 ways to get the lowest interest rate on student loans
These four steps are the key to saving as much as possible while rates are near record lows.
- Shop around for rates
- Use a student loan calculator
- Improve your credit score
- Consider applying with a cosigner
1. Shop around for rates
Lenders set their own policies for who is offered the most competitive interest rates. Get quotes from multiple lenders so you can see what terms each is offering and get the loan with the lowest cost.
One of the easiest ways to shop around is to visit Credible to view a rates table that compares rates from multiple lenders at once.
WHAT ARE STUDENT LOAN REFINANCING RATES?
2. Use a student loan calculator
It's important to understand exactly how different student loan refinance offers would affect both your monthly payment and total costs. That's because some loans with longer repayment terms have lower monthly costs but charge more total interest over time. Others are paid off more quickly and come with higher monthly payments but are cheaper overall.
Credible's online student loan refinancing calculator can help you compare different offers from various lenders to see which is really the best fit.
STUDENT REFINANCING RATES GOING DOWN - HERE'S WHY
3. Improve your credit score
Lenders offer more competitive rates to borrowers with good credit.
For example, Credible's data on current loan refinancing rates shows that borrowers with a credit score of 780 or higher could qualify for a 10-year fixed-rate refinance loan at an average interest rate of just 3.77% compared with borrowers with a score between 640 and 679, who would pay an average rate of 5.09%.
You can improve your credit score by correcting any errors on your credit record, as well as by trying to reduce the balance on your debts to enhance your credit utilization ratio.
SHOULD I REFINANCE MY STUDENT LOANS?
4. Consider applying with a cosigner
If you present as a high-risk borrower to lenders because your credit isn't perfect or you don't have much income, you may not be able to get a refinance loan or may only qualify at a higher rate. A cosigner with solid financial credentials could help you get better loan terms so you can maximize the savings that refinancing at today's low rates can provide.
You can find a list of lenders that offer student loans with cosigners here.
5 WAYS TO LOWER MONTHLY STUDENT LOAN PAYMENTS
Today's refinance rates
Refinancing in today's economic environment gives borrowers the best chance in years to get a cheap refinance loan. In fact, according to Credible's monthly student loan refinance rates tracker, the rates on both 10-year fixed-rate loans and 5-year variable rate loans are very competitive relative to historic norms.
In November 2020:
- The average pre-qualified rate on a 5-year variable rate loan for a buyer with a minimum credit score of 720 was 3.25%, which is down both from October and from last year.
- The average pre-qualified rate on a 10-year fixed-rate loan for a buyer with a minimum credit score of 720 was 3.95%, which is also down both from October and from last year.
While these are average rates, you may be offered a more or less competitive rate depending on your financial credentials. To find out the rate you would pay if you refinanced in today's low-interest market, visit Credible to compare student loan refinancing rates from multiple lenders at once without affecting your credit score.