When you sign up for auto-pay you are in effect giving the bank permission to withdraw money from your bank automatically to make your monthly student loan repayments.
Benefits to Student Loan Auto-Pay
There are several benefits to choosing this route. The first is the sheer convenience of knowing that your payments will be made for sure every month, on the date that you set it up for. This means you do not have the headache of setting a reminder nor do you have to write out a check every month or pay the postage for mailing the check to the lender. The money is auto-debited from your account every month and deposited into the lender’s account electronically.
Signing up for auto-pay helps you save money, which is especially important if staying organized with your monthly payments is not your strong point. Most lenders will fine you if your payment reaches them even a day late. Some lenders may even increase the interest rate on the remainder of the loan, costing you hundreds of dollars extra over the term of the loan. With auto-pay, this situation will never arise as your payments will always go out on time, every time.
One Con for Auto-Pay
The only caveat to signing up for auto-pay is that you must make sure that you have sufficient balance in your bank account to cover your monthly payment on the due date.
Use College Raptor’s free Student Loan Finder to compare lenders and interest rates side by side!