Avoid These Mistakes While Applying For Students Loan
Before refinancing your student loan, if you are not careful enough then you have to bear the burden of your loan for good many years and on the contrary by avoiding some common mistakes you can save plenty of dollars in your pocket.
Following are few common mistakes that can really make your life miserable, when you are repaying your loan with interest.
Not doing enough research about various financers
Most of us are in real hurry while applying for loan and commit a mistake of not collecting sufficient info on student loan refinancing procedure of various loan providers available. Interest rate is one of the most important factors, which may range anything from 4.5 percent to 8.5 percent offered by various financers.
If your credit score is good then you can be a good candidate for loan with lower interest rate. While selecting your financers you need to look carefully about their repayment terms. Some financers offer career support or protection against unemployment. You should also not miss to read the reviews about your financers.
Not considering the duration of repayment
Often we make decision by looking at monthly installment and end up repenting later. If the monthly installments are lower then you have to pay more amount of interest for longer years. On the other hand by paying higher monthly installment you can save your interest and also quickly get out of debt.
Applying for loan without any preparation
Before applying for student loan, you must give a look to your credit score. If your credit score is good only then you are eligible for loan at lower interest rates. You also need to look at your spending habits. If the financer discovers that you are too extravagant then they may not offer you loan with lower interest rate. Also, you should clear your credit card bills in timely manner before applying for loan. Careful approach can surely save you lots of interest for your loan.
Not considering variable and fixed interest rates
When you apply for loan then you are offered a choice of fixed interest rate or variable interest rate. If the variable interest is lower than fixed interest rate at the time of applying, don’t think that it will remain the same in future too.
Variable rate of interest may change due to various factors like economic situation, which is always unpredictable. Fixed rates will always remain the same. However, if you are planning to clear your loan within 1 to 2 years then variable loan makes sense.