It is unfortunate that education does not come for free, and sadly, for most college students, education can be extremely expensive. Student loans that are left unpaid can haunt the student for the rest of his life. Not to worry, though. If you are in this predicament, what you can do to ease your burden of paying the loan is to get another loan with a smaller interest rate. You can pay off the college loan in a lump sum, and simply continue to pay the other loan at a more reasonable monthly rate.
- Review your current loan rates and terms. Take a look at the interest rates and payment terms for the student loan you are paying. Take note of how much per month you need to pay. The information you gather here will help you determine what to look for once you start searching for creditors and lenders you can take out a loan from.
- Search for creditors. Usually, there are promotions for low interest loans from banks. You simply have to take your time and review them all. In some cases, a number of banks will offer to transfer your high interest loan to them and just spread out the cost of the loan for several more months to lower your monthly amortization. Make sure that there are no hidden charges in banks offering you lower rates since you might end up paying double for your loan if you do not review their rates thoroughly.
- Aside from banks, you can check other lenders and financial institutions that may provide you a much more beneficial option compared to banks. In most cases, the application and processing of a loan with a non-banking lender is faster and easier.
- As much as possible, look for fixed amount loans. For loans that span several years, there are cases wherein there is a scheduled refactoring of the outstanding balance. You must avoid these types of loans and look for one that has a fixed monthly rate until the very end your payment schedule.
- Know when to back out. If while canvassing for a new loan you notice that there are no lower interest rates for you to take, then it is best to stick with your current plan and find other means to help you pay for it. The loan that you got for your college tuition fee might be your best option at this point in time so find alternative ways such as starting a new business or getting a second job, to start paying for it.
- Keep up with your current loan. Remember that you need to pay your monthly amortization on time to prevent the charges from ballooning. Start aggressively saving your salary and if possible, set an automatic debit arrangement with your loan provider towards your bank account so that you won’t forget to pay your bills on time. You can also ask your loan provider if he can refactor your loan to a smaller interest rate or extend your payment scheme so that your monthly rate will be a bit more manageable.
You must fight off the urge to get a new loan just for the sake of getting one. With careful studying and patient canvassing of rates, you should be able to make an informed decision of whether getting a new loan to pay off the old one is worth it. Do not hesitate to call up a loan provider with interesting loan rates to confirm if there are any other hidden charges that you should be aware of.