You may have asked yourself this question before, wondering if it is truly worth the time and effort associated with a refinance to save what may amount to a few hundred dollars or more. There is really only one way to find out whether and how much a refinance can save you, and that is to input your information and get a rate quote based upon your credit. I’m not sure about you, but the thought of saving several thousand dollars over the next 5-10 years excites me.
For many individuals student loans can be in excess of $50,000, with some going into the hundreds of thousands of dollars. If you have loans in this range, or even the tens of thousands of dollars, then you truly should review your current interest rate and financial situation and find a way to attack and get rid of those loans. A refinance to a lower interest rate and possibly even a shorter repayment period can save you thousands potentially. If you can afford it, or will commit to getting rid of those loans fast (suck it up short term and enjoy the benefits long term).
As an example, let’s say one has $50,000 in student loans and is presently locked into an interest rate of 7% with 15 years left to repay. Your current monthly payment is about $449 per month for the remaining 15 years. With a refinance through Social Finance (SOFI), you could be looking at a shorter loan term of 10 years at an interest rate as low as 4.5% with a slightly higher payment of $550 or so, but would save up to $18,711 for the life of the loan. This is a car you could save for, or $18,000 you could use to invest, put a down payment on a home, etc. This is no joke, now we are talking about serious money. This is not something that you should simply overlook.
Picture what the savings would be if you have student loans of $100k (a 20 year loan, 7% interest rate). With SOFI you could possibly refinance at a rate as low as 4.5% to 6.5% (usually the shorter the repayment period the better the interest rate, which means you would need to pay more principal each month and thus have a higher payment, but it can be worth it). This could equate to almost $300 more each month for your monthly payment (going from $775/month to over $1k/month), but you would save almost $62,000 over the life of the loan. Are you kidding me? That’s incredible! Imagine saving $62,000 just by making one little change and sucking it up (forgoing a few extras for a number of years) so that your financial future can benefit as much as possible.
As you can see, it’s worth taking the time and effort to consider whether a refinance would help you save thousands over the course of your loan repayment, and whether you can speed up your loan repayment for that matter for a limited additional amount each month. In some cases you may simply refinance with the same term, get a better rate, and lower your payment. I would recommend giving up something wasteful you spend $100 or so on each month and going for the shorter repayment period to help jumpstart your financial future, it will be worth it long term.
Click on the links on this page to get a special $100 cash back reward as my referral (this comes directly from SOFI as my referral). The $100 will be rewarded if you decide to refinance your loan through them and are approved and the loan funded*. The larger reward of course is the long term savings you will get through the refinance. Prioritize payment of those student loans, forgo some extras, and make it happen. Imagine your life 5-10 years from now with no student loan payment, and having saved thousands in interest. You could go from paying $1000 each month in student loans, to saving $1,000 each month or investing that money. You had to borrow to get the degree, now get your financial future back on track by getting rid of those loans. Don’t keep paying the government 7% interest for the next 15-20 years. Get rid of those loans, pay them down, its the equivalent of investing and making a 7% return if you are paying down a 7% loan, and as you can see, it ends with guaranteed long term savings and your increasing your net worth, by reducing your liabilities.
*The party and or parties behind this site may have relationships with the listed companies/advertisers above and may receive compensation related to any offers.