Student loan refinancing can mean big savings. See how much total interest you would save by refinancing and what they could mean for your finances.
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Ready to start saving on interest? See which refinance rates you’re eligible for with a quick comparison of the industry’s best lenders.
Interest is the amount of money paid regularly at a particular rate for the use of money borrowed from a student loan lender, or for delaying the repayment of a student loan debt. In essence, it’s the “extra” money you have to pay back the lender for the opportunity to use their money to go to college (or pay off your existing student loans by refinancing).
Interest is calculated as simple daily interest for student loans. This generally means that each day, the outstanding principal balance is multiplied by the interest rate and divided by 365 days to calculate that day’s interest amount. For example, if you have a $10,000 loan and the interest rate is 7%, one day’s interest will be: ($10,000 x 0.07) / 365 = $1.92.
Our lenders generally determine interest rates by your credit score and the type of degree you have, among other criteria. Your loan amount usually does not directly affect the rates offered. Your annual income is factored into DTI (debt-to-income) calculations which may impact your interest rate. If you apply with a cosigner or refinance with your spouse, most lenders use the higher credit score to calculate your interest rate and save you even more on your student loans. Remember, you can check your estimated rate offers using our Compare Rates tool at any time with no impact on your credit score.
Student loan refinancing is a process where you take out a new student loan with a lender who pays off your old student loans. This essentially combines your existing student loans into one, with a new interest rate and the repayment term of your choice. Qualifying borrowers may be able to save significant amounts of money by lowering their interest rate.
Yes, it can – and in more than one way. If you get a lower interest rate and/or shorten your repayment term, you save on interest over the life of the loan. On the other hand, if you choose a longer repayment term, you get a lower monthly payment, which can free up room for other monthly expenses.
If you have high interest federal student loans or private student loans, getting a lower rate through a student loan refinance will reduce the total interest you pay (all else being equal). Not only would a lower rate save you money on interest costs, but it can also lower your monthly payment to make it more affordable.
Not with any of Purefy’s recommended lenders. All of Purefy’s best student loan refinance picks charge no origination fees or prepayment penalties.