When you take out a student loan, you’ll have an interest rate that you will have to pay on the amount that you borrow. For the most part, interest rates will remain consistent throughout the life of your loan (especially if you opted for a fixed rate). Interest rates greatly affect how you calculate student loan payment. However, there are things you can do to lower the interest rate and reduce your overall debt.
Sign Up For Autopay
When you sign up for autopay your monthly payments are deducted from your checking account and transferred to the lender’s account automatically. Lenders appreciate receiving their payments on time and oftentimes will reward borrowers with a 0.25% discount rate discount.
Opt for Variable Rate
With variable rates, the interest on your loan is pegged to market conditions. The benefit with a variable rate loan is that if the market drops steeply, the interest rate on your loan will drop too, lowering your monthly payments and the total cost of your loan.
Refinance or Your Loan
Once you have built your credit history, you can refinance your existing student loans at a lower rate of interest. If you have not managed to build your credit history, you can still get approved for refinancing if you have a creditworthy cosigner.
Interest rates greatly affect how you calculate student loan payment. But you don’t have to be stuck with a higher rate of interest on your student loans. Just these three measures will help drop the interest rate on your loan, saving you hundreds of dollars over the life of the loan.