Student loan debt refinancing interest rates at all-time low
Getting rid of a mountain of student debt could be much faster now, thanks to lower rates on economical refinancing.
Student loan refinancing rates have fallen dramatically for five-year and ten-year loans, new figures from a major loan market show. And some refi rates have hit a new all-time low.
Currently, 45.3 million borrowers are in student loan debt, notes the research site EducationData.org. And half of borrowers still repay their loans 20 years after starting their studies.
Taking advantage of today’s lower interest rates on a refi can save a typical borrower thousands of dollars and help them get off their debt faster.
5-year variable rate loans
For borrowers looking to pay off their student loans faster, five-year variable rate refinancing loans fell to 2.48% on average during the week of Oct. 18, according to figures released this week. This is a new record for the refi rates tracked by the Credible Market.
The previous all-time low was 2.53%, set at the end of August. Rates fell last week from the previous week’s average of 2.59%. A year earlier, the typical rate was 3.20% higher.
The average rate is specifically intended for borrowers with a good credit score of at least 720. Even better rates are possible for people with exceptional credit of 780 or more.
Borrowers with an average credit score (between 640 and 679) get higher rates, with an average of 4.59%.
Since variable rates fluctuate with market conditions, borrowers could find themselves even more stuck as the term of their loan progresses.
10-year fixed rate loans
For borrowers looking to get a good deal, 10-year fixed-rate loans averaged 3.39% last week, the data showed. This was down from 3.46% the week before.
Rates are now close to the historically low 3.36% average set in September.
Better credit scores mean better rates. But borrowers with only âfairâ ratings between 640 and 679 get less favorable rates with an average of 4.77%.
A 10-year loan offers more affordable payments than a five-year loan because you have more time to repay the money, but you will be spending a lot more money on interest due to the longer life of the loan. ready.
How to get the best refinance rate
If you have a federal student loan, make sure you know what you’re giving up before you go for a refi.
When you switch from a government loan to a private loan, you will not be eligible for the government support that some borrowers received during the pandemic, including payment freezes, interest waivers, and even loan cancellation.
If you already have a private loan or don’t mind compromises, refinancing your student debt could make a big difference in your budget.
Here are some tips to help you get the best rate possible.
Increase your credit score. Lenders take your credit score into account when deciding if you are a good risk for a refinance loan. Check your credit score for free and find ways to improve it. You can get advice using a free credit monitoring service, which can show you how to get rid of other debt faster.
Configure automatic payment. Many lenders will reduce a small percentage of your interest rate if you’ve signed up for automatic payment. This ensures that they will be paid on time every month.
Consider a co-signer. If your credit score is too low to qualify for a better interest rate, you may want to ask a friend or family member with good credit to co-sign your loan. But be careful, because your co-signer will be blocked from repaying your loan if you cannot afford it.
Compare your options. The world of student loans is huge, and the only way to be sure you’re getting the best deal is to shop around. Always get quotes from multiple lenders, as different lenders will weigh the factors in your application differently. Compare the conditions of each offer before clicking “Apply”.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.