Normally, anyone who has a student loan has to start making repayments within six months after graduation from college.Some borrowers though wait until the very last minute of the grace period given before they start doing something.A pos
sible effect of this kind of attitude is late payment which is a no-no when it comes to the world of lending.Why?Because once you missed a payment, here comes a line of fees that will add burden to your loan.This charges may include late fees and additional interest.And so what happens to your loan is it inflates.The more you procrastinate, the bigger your total loan amount gets.
When is the best time to start repaying?
It is highly recommended for you to start repaying the loan as soon as possible after you get out of school.If you can not afford the standard repayment option, then you c
an negotiate with the money lender to lower it down.Another way is to refinance student loans after graduation.
Refinancing is when you take a new loan from another company that has better terms and conditions compared to what you currently have.Once approved, they will then help you to pay off your original loan.
Benefits of Refinancing
- Better interest rate – Through refinancing, you may have a lower interest rate.But remember that this is only applicable to those who is considered as a lower risk.They are the borrowers who have maintained a good credit, or better yet, who had improved their credit score.In this case, the refinancing company will check the flow of your score from the time you took your first loan up to the time that you decided to take a new loan from them.A good credit score implies that you are a responsible borrower.This is the reason they are giving you a lower interest rate for your loan.Of course, every lending company wants to keep the business of a good customer.
- Speeds up repayment – When you decide to refinance your loan, you will be given the chance to choose a repayment plan.You may either take the standard payment, or you may also set a higher amount if you can afford it.This will quicken the process of repaying your student loan
- Savings – If you set a higher repayment amount monthly, it would mean that you will be paying lesser interest than that of the standard option.