When taking out a student loan, you sign an agreement with your lender to repay the loan with interest. You will then have a minimum monthly payment which covers the principal and part of the accrued interest. While you have signed such agreement, you are not actually stuck with your rate forever. There are ways to lower rate as long as you meet some criteria. Consider the following ideas:
Set Up an Automatic Payment
A lot of private loan lenders provide a 0.25% discount on the interest rate if you let them automatically withdrawn the minimum payment from your bank account every month. Although that number doesn’t seem big, it could make a significant difference in your total repayments. Lenders provide this benefit as an incentive to get you to enroll in automatic payments, reducing the risk of you falling behind on your monthly payments. Plus, this option is convenient for you since you don’t have to worry about missing your payments.
But, while it is easy to enroll in automatic payments, you must stay on top of your finances to ensure your bank account has enough money when your lender processes the automatic payment. Otherwise, you could be dealing with overdraft fees and penalties.
Pay your Bill in a Timely Manner
A number of lenders provide a reduction in your interest rate if you make years of consecutive on-time payments. You can enjoy this extra discount if you never miss a payment. The majority of lenders will apply this discount to your account automatically if you have made the required number of payments. However, you should ensure your payments arrive on time because even a single missed payment will make you lose your eligibility for this discount.
Refinance your Loan
If you currently have a high-interest private student loan, refinancing can help you get a lower interest rate and save money. When you decide to refinance your current student loan with a private lender, you will work with the latter to take out a new loan to repay all or some of your current debt with low-interest student loans. The new loan will have a new monthly payment, new interest rate, and repayment term. Get a cash loan from Captain Cash.
If you are a borrower with a stable income, good credit, and a cosigner, refinancing companies will never turn their back on you. Refinancing can be one of the most cost-effective means to lower your interest rates.