Lower monthly payment or lower interest savings?
As one of our first posts since the launch of our website, we want to provide additional insight on a few key concepts which may be crucial to your refinancing decision. One of the most important concepts is the tradeoff between a shorter or longer term loan. Neither is inherently better or worse; it just depends on your particular financial goals. To keep it simple:
- A shorter-term loan means that you will be paying back your principal in a quicker time-frame that will result in getting out of debt sooner and saving thousands of dollars in total interest.
- A longer-term loan means that you will be paying back your principal and a higher amount of interest over an extended time period. You will typically have a lower monthly payment but pay a lot more in total interest.
Typically, individuals who opt for a shorter term will pay a slightly higher monthly payment, but will achieve a substantial amount in interest savings – an average of $32,300 in savings for all Purefy borrowers.
The wisest choice between the shorter- or longer-term options depends on your personal situation. If you are someone who is more recently out of school and working to build a savings cushion, a longer-term loan might be right for you. If you are someone with a high-level of cash-flow or more financial stability, a shorter-term loan might be best option because you will get out of debt quicker and save much more over the life of the loan.
We have developed a great way for you to visualize this concept. If you find your savings through our website, you can look at all of our refinancing options and see which scenario makes the most sense for you.
Ultimately, our goal is to help you conquer your student loans. If you have any questions, please don’t hesitate to contact us.