Refinancing and consolidation may be smart solutions when you are looking for ways to renegotiate the terms of your loan, lower monthly payments or reduce the loan interest rate. However this may not be the best decision for everyone.
All student loans come with different terms and interest rates. These will change when you choose to refinance or consolidate your loan. What you must keep in mind is that these options may not necessarily lower your interest rate or your monthly payments. Before you decide to refinance or consolidate your student loans, you must ask your lender to give you details about what aspects of your loan will change. You must then compare the new terms with your existing terms and only decide to go ahead if the new terms are favorable.
For example, if you refinance or consolidate, will the new rate of interest be lower than your existing interest rate?
What about the monthly payment? Will the new monthly payment be lower than the amount you currently pay every month?
Go through all of the other changes in detail. Do they give you the results you are hoping for?
Refinancing or consolidating student loans are not the best solutions in all cases so make sure you ask your lender about what changes to expect if you choose either of these options. Only go ahead after comparing the new terms with your current terms and if the outcome is favorable for you.
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