Having your college days behind you can be a great feeling, but managing your student loan debt can be harder than expected. Post college life can include expenses you didn’t realize would be there, so not paying anymore than absolutely necessary by refinancing student loan debt can really help.
Refinancing your loans should be a slam-dunk, but there can be things that could make you not so attractive to a potential lender. There are a few things you should consider before talking to lenders to be sure you’re ready.
Things to consider
1. Do You Earn Enough – Lenders may have specific requirements around how much you bring in each year to be eligible for a student loan refinance.
2. Is Your Credit Score Too Low – Having a low credit score never helps when trying to finance anything, and the same is true with student loans. You may need to get your credit back on track before exploring a student loan refinance or consolidation.
3. Is Your Debt-To-Income Ratio Too High – Companies that lend money almost always look at your debt-to-income ratio as a sign of potential financial problems. If you have taken on more debt than you maybe should have, lenders may not want to give you money. Basically, if your monthly expenses are too high compared to your income, then that makes lenders less likely to lend to you.
If you don’t feel like you may be the best candidate, you could still have an option. Getting a co-signer or co-applicant (usually a parent or close relative) that is a better financial situation can do the trick. This person will be accepting responsibility for your loans if for some reason you don’t pay, so it’s not something to take lightly.
After considering these three factors and you feel like you are in a good place, then explore refinancing student loan debt or student debt consolidation could be a great way to save some money each month.