Getting your APRs and ACHs mixed up? We put together a list of common financial terms you will see when refinancing your student loans with Purefy.
Annual Percentage Rate (APR):
the interest rate that is charged for borrowing, expressed as an annual percentage.
Automatic payments/Automated Clearing House (ACH) payments:
electronic payments authorized by the borrower to automatically debit from the borrower’s account for bill payment. Fun fact: setting up automatic payments for your Purefy loan will save .25% on your interest rate, or a total of .50% if you sign up for our free checking account with automatic payments.
taking several loans and combining them into one loan payment. When refinancing several of your student loans, this is automatically done to give you one easy monthly payment. We can also consolidate your Federal and private student loans.
a person who is held responsible for the loan if you default. Having a co-signer on your application will allow you to be approved if you do not meet our credit or income requirements on your own. We use the higher credit score to present your loan rate. If you have a co-signer on your existing loans but now qualify to refinance, apply on your own to release them from your loan.
Learn more about the pros and cons of having a co-signer.
the postponement of payment on a loan. Purefy does not advertise for deferment (or forbearance), but will work with a borrower on a case-by-case basis if an extraordinary circumstance were to occur (death, illness, or loss of a job).
the actual payment of your loan. When your loan is disbursed, Purefy has paid off your old loan servicers and taken over the debt.
your debt-to-income ratio, which is calculated by comparing the amount of monthly debt you have to your income.
Read more about DTI and how it’s calculated when buying a home.
Fixed Interest Rate:
these rates stay the same over the life of the loan. That means your monthly payment will never change. Purefy offers fixed rates ranging from 3.95% to 6.75%. This is a good fit if want your payment to stay the same every month.
the temporary postponement of loan payments when interest continues to accrue.
different from a monthly statement, the payoff statement takes daily interest into account and projects the amount of money your current lender needs to receive to completely close out the loan on a specific date in the future. We ask for your payoff statement during the application process, and you can simply upload a screenshot.
paying more than your monthly payment on your loan in order to pay it off faster. Remember, we never have fees or penalties for pre-payment!
this rate is an index used to calculate our variable interest rates, and is published daily in sources like The Wall Street Journal. The prime rate is more stable than LIBOR, which most lenders use to calculate their variable rate. Lenders who use LIBOR may change their variable rates monthly; Purefy’s variable interest rates are subject to change quarterly since we use the prime rate.
the total amount of money borrowed, not including interest. Refinancing your student loans helps you pay more money towards the principle, not interest, to get out of debt faster.
Parent PLUS Loans:
a Federal loan taken out by a parent for their child. Purefy can transfer a Parent PLUS Loan to a child who is ready to take responsibility for the loan. Chat us if you are interesting in learning more about this option.
the process of taking one or more loans and turning them into a single loan with a lower interest rate and/or different term than the existing loan. Our most popular refinancing option has an 8 year term to get you out of debt faster.
an opportunity to earn $200 for each closed loan you refer to Purefy! You can learn more and sign up here.
your student loan contract that outlines the terms of the loan and your responsibilities as a borrower.
the length of time it takes to repay a loan. We currently offer 5, 8 and 12 year terms for fixed rates, and 5 or 8 year terms for variable rates.
Variable Interest Rate:
these rates have the potential to fluctuate quarterly and are based on the Prime Rate plus a fixed margin. Purefy offers variable rates as low as 2.75%. Choose a variable rate if you are comfortable with the possibility of your payment changing on a quarterly basis.
These terms don’t just apply to student loans – they are great basics to know for financial literacy. Have other terms you are curious about? Tweet us @Purefy #glossary to have your questions answered.