Student Loans 101

Published on Author Bethany Sims

Refi or Refinance – Refinancing is simply paying off your existing loan or loans with the proceeds of a new loan.  This is usually to get a lower interest rate or change your repayment term.

For example, most homeowners refinance their mortgage when market interest rates turn lower than what they have been paying. Getting a new loan to pay off existing loans may sound odd to a student loan borrower, but it’s simply borrowing new money at a cheaper rate than you are paying on your old money.  Think of refi as a happy hour for interest rates… a great deal now, before rates go back up.

Consolidation – Consolidation is combining all your loans into one simple monthly payment. Do you pay this week? Or is it next week?  Consolidating allows you to simplify your finances and your life.  When borrowers refi with a private lender, most often they are consolidating multiple loans.  The federal government also has a consolidation program; however, they do not allow you to lower your interest costs as we do.

Term – What age will you be when you are done paying for your degree?  The lengths of term for student loans have a wide range, some up to 25 years.  Our most popular term is 8 years – long enough to keep monthly payments manageable, but short enough to see light at the end of the tunnel.  We also offer 5 year and 12 year terms, but nothing longer.   We prefer not to think of our borrowers still paying on student loans in their fifties!

Interest Rate – Interest rates for borrowers refinancing through us are based on credit score, job, education, and employment as well as the term you select, and whether you choose a fixed or variable rate.  Our average borrower saves more than $1,500 a year. Are you still paying the interest rate of your fit 18 year old self?  You’ve grown up; it’s time for your adult interest rate.

Variable Interest Rate – Our variable rate loans are subject to change quarterly, based on changes in the Prime Rate reported in the Wall Street Journal.  These variable rates are lower than fixed rates at the time your loan closes, but are subject to increase (or decrease) over time.  So they are riskier, but offer great savings. If the excitement of tremendous savings now but with a potentially different payment every quarter is your cup of Red Bull, a variable interest rate is for you.

Fixed Interest Rate –a fixed interest rate remains constant no matter what the market is doing. Which means your payment remains the same every month for your entire term. Type A personality? This is the way to go.

Fees – Some lenders charge fees to originate a new loan, while others sock your wallet for paying off your loan early.  It’s worse than the hidden bag fees during wedding season. We don’t believe in extra hurdles when trying to get out of debt, our loans are fee free.

Ready to refi? Get in touch at info@Purefy.com or fill out your application here.

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