Should I refinance my student loans as lump sum?
I am looking into refinancing my student loans. Right now I have multiple student loans under Sallie Mae. All are different amounts with different interest rates. When looking into refinancing, is it better to refinance them as a lump sum amount with one payment and one fixed interest rate or refinance them individually to see if some get better rates than others?
- 4 weeks ago
- Coffee DrinkerLv 74 weeks ago
Roll all the loans together if the rate on the new loan is lower than the current rate on that particular loan.
Don't roll lower rate loans into a consolidation loan with a higher rate - the one exception would be if you go from a variable rate to a fixed rate that is only slightly higher.
For example lets say you have 4 separate loans at 3%, 6%, 7% and 9% interest rate. If you can get 5% fixed rate on the new consolidation loan, then you should ONLY include the 3 loans that are currently at higher rates - but don't roll the existing 3% loan into a 5% loan.
Look closely at the loan term. Consolidating into one payment with a longer term sounds attractive because it can reduce your overall monthly bill, but you end up stretching the debt over a longer period of time and paying more interest in the long run.
- ALv 74 weeks ago
refinance all if you can get a lower rate, otherwise just refinance the higher interest loans
- SlickterpLv 74 weeks ago
Most likely the lump is best.
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- ScottLv 74 weeks ago
That's called a "consolidation loan". Run the numbers, it might save you some money.
- nathaan27Lv 54 weeks ago
If you can get them together into a better interest rate, yes. Otherwise, just start paying them off smallest loan to largest regardless of interest rate. That way you get a feeling of accomplishment once you pay one off.