If you or a loved one has student loans, you may have heard that they can be refinanced to help you save money. It’s also possible that you may have seen a few social media ads from lenders trying to sell you on the idea.
The bottom line is that refinancing makes sense for a lot of people—especially those who have a good job and excellent credit, helping them qualify for the lowest student loan refinance rates.
But how do you know which lender is right for you?
There’s only one sure way to make sure that you get the best student loan refinance rates: you must compare your options from multiple lenders. The easiest way to do this is by using a comparison tool online, like Purefy’s rate comparison tool, which gives you actual rates from multiple lenders that are customized to your situation and credit profile.
How getting the lowest student loan refinance rates can save you money
The main reason for refinancing student loans is to get a lower interest rate. The lower your rate is (all else being equal), the less you will pay in interest over the life of your loan.
Furthermore, if you are able to lower your rate significantly, you may also be able to shorten your student loan repayment term while minimizing the impact on your monthly budget. Shortening your term generally increases your monthly payment, but if you are getting a low student loan refinance rate at the same time, the difference may be affordable.
Always remember: paying off your student loan as quickly as possible is the number one way to save money in the long run.
On the other hand, if your main goal is to lower your monthly payment, either because you need to focus on other life goals or because your budget is tight, you’ll want to choose a longer term. Most lenders offer 15 or 20 year term options. In this situation, finding the lowest student loan refinance rates is perhaps even more critical.
By lengthening your term to loosen the load on your monthly budget, you will probably see a drastic increase in the total interest you have to pay over the life of the loan. Getting a low rate will help minimize this damage.
Don’t get fooled by bogus rate ranges
If you’ve started looking for the best student loan refinance rates already, maybe by checking out lender websites, or looking at —top 5 student loan refinance” lists online, you’ve probably seen eye popping rates that seem too good to be true.
That’s because for almost everyone, they are.
You won’t find out your actual rate until after you apply. And to get the lowest student loan refinance rates that are advertised, you will likely need to have outrageously good credit, pick only certain terms/repayment options, and meet other lender criteria. You may well get a great, low rate, but you’ll never know unless you compare offers from multiple lenders.
Student loan refinance companies are required by law to provide rate ranges which show the lowest and highest rates on offer for a particular loan product. For most lenders, these are the only rates made publicly available (i.e. without actually applying for a loan).
As such, there is naturally a competition to have the —lowest rate,” because many people may assume that the lender with the —best” low rate in their rate range is going to be the best across the board. In that sense, the lowest rate is there mainly to get people in the door.
We don’t blame you if it feels like —bait and switch”—that’s why these low rates are called —teasers.”
It’s kind of like an intersection with gas stations on each corner—the owners all know that if they are just one cent lower than all the others, they will get extra business. But unlike with refinancing student loans, when you drive on the gas station lot, the attendant won’t come out from the booth and tell you that you actually didn’t qualify for the lowest price on 87 octane.
So, take teaser rates with a grain of salt. That said, it’s certainly possible that if you have taken great care of your credit and fit the lender’s criteria, you might qualify for one.
Be careful where you compare lenders
When it comes to comparing student loan refinance companies, beware the —top 5 lender” websites that only provide rate ranges. Most of these websites receive compensation for referring you to lenders (just as Purefy does), and the order in which lenders are ranked may have nothing to do with which one will offer YOU the best student loan refinance rate, let alone have other benefits like great customer service.
You should always check to see if a site explains how they arrived at their rankings, or what criteria they used to evaluate their lenders. Very few sites do this—for the many that don’t, it should throw up a red flag.
Looking at online reviews of lenders can provide a lot of valuable information and is worth exploring, especially to compare the different features that lenders have. But the bottom line is that student loan refinancing is all about getting a lower rate, and most of these —top 5” sites provide no way to tell what rate you will qualify for.
The easy way to find the best student loan refinance
Going to a bunch of lender’s websites and filling out multiple loan applications sounds like a terrible way to spend an evening, right? We agree—that’s why we designed the Purefy rate comparison tool.
It’s an easy way to compare lenders and find the best student loan refinance. Enter just a few details about yourself, and you will be presented with real, prequalified rates from a selection of quality, vetted lenders. These rates are based on your credit score and borrower profile—no teaser rates to worry about. Comparing rates on Purefy has no impact on your credit score.
This lets you make an informed decision—transparency is what Purefy is all about. We will never steer you to one lender or another because it’s in our own interest. We want you to choose the lender that is best for you, and our goal is to give you the tools to do exactly that.
You can compare rates, terms, monthly payments, and total savings all in one easy, sortable chart. You can also try adding a cosigner, to see if that helps you qualify for an even lower rate.
If you like what you see and select a lender, you will be taken to their specific loan application. It takes just seconds to find your rates, and a student loan refinance loan application generally takes less than 15 minutes to complete.
And as always, if you have any questions, you can always reach out to our award-winning customer service team by phone at 202.524.1115, email at [email protected], text at 202.688.5572, or web chat.