Oct
08
Why does my lender want me to refinance my student loan?
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I keep receiving mail from my lender telling me to refinance before July 1, when the rate on my current, adjustable rate student loan will increase. I understand how this benefits me, but what does my lender get out of the deal? Why are they advertising this? Do they expect rates to drop enough over the course of the loan that I would be better off sticking with the adjustable rate?
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5 Comments
October 9th, 2009 at 4:56 pm
If you refinance, the place refinancing your loan will pay off that lender in full and free up that money for them to use for a higher rate loan somehwere else. They are also trying to do you a favor. You don’t have to refinance if you don’t want to, but with an adjustable, why not lock in a rate?
October 12th, 2009 at 7:07 am
They want more money!!! Even if the rate is lowered you will not really save money. Consolidating will lower your payments (usually) but you will be paying for years longer adding to the overall amount of interest paid…if you are happy with your monthly payment…stay away from consolidation.
October 14th, 2009 at 11:24 am
as a mortgage broker, they want more business. it will help you out since you have an adjustable rate loan now. consolidating it to a fixed will keep your rate steady as well as your payments. if you credit is good/excellent than I would suggest you do it. adjustable rates are a crap shoot, they may stay the same, they may drop but they will most likely go up. your lender will get commission and business and such, but he’s gotta eat too you know. it’s always more prudent to switch to a fixed rate loan so long as the rate is good. depending on your credit 5-7% is good. and 7% is pushing it. not sure what your rate is now but expect it to go up consistently. and working in this business, rates NEVER drop, they always go up. check your credit score. if it’s 680 or higher, switch to a fixed rate.
October 17th, 2009 at 6:48 pm
Probably because the interest rate is going to go up on student loans. If you refinance, you can lock in the current interest rate, which will save you money in the long run. Make sure you read the fine print…the best thing is to consolidate your loans through the company that holds them.
October 17th, 2009 at 9:16 pm
These are consolidation loans before the interest rates go up July 1. The government is telling people about this. Go to Sallie Mae’s website and read about it and see if you need to do this or not