topic Should I bother refinancing a private student loan with about 2 years left? in Student Loans

Should I bother refinancing a private student loan with about 2 years left?

susantrexel — Sat, 10 Jun 2023 23:45:46 GMT

I've been looking at refinancing options for my private student loan. I have about $14,500 left on the loan(s) with Navient. 3 seperate loan rates ranging from about 10.5% to 11.25%. Monthly payment now is $650. Loan term ends fall 2025.

Did a prequal application with SoFi. Was qualified but only for 8.99% with a minimum term of 5 years. Monthly payment was lower.

I did a prequal application for PenFed just now and was denied. They said I would need a cosigner due to my credit score. My credit score range from about 720 to 745. This is the FICO 8 scores but across all the FICO ranges that is about the range still.

I would really like a refinance loan for the same loan term about 2 to 3 years. I don't want 5 years although a lower payment would be nice once federal loan payments start again.Just looking at the totality of the circumstances. Seems like it doesn't make sense to refinance.

Re: Should I bother refinancing a private student loan with about 2 years left?

RBD22 — Tue, 13 Jun 2023 17:12:50 GMT

I'd say it's definitely worth refinancing to decrease your rate by that much. Check the new loan terms but most prime lenders (such as SoFi) don't penalize you for paying it off early. Assuming no pre-payment penalty and assuming you can afford the current payment, you could always continue paying the same amount that you're paying now and, since the interest is lower, you'd actually pay it off before the planned pay off date for your currently loans (because you will accrue less interest and thus pay more principal every month). You don't mention the new payment but based on your current expected payoff date, I'd guess you'd pay it off in 2-3 years.

Alternatively, plug the numbers into an online calculator and determine how much you'd need to pay on that new loan to pay it off by whatever date you want.

That's what I did years ago when I refinanced my private loans.

Edit: Also, try a couple of other lenders to see if you can find an even better rate. Inquiries due to rate shopping (a bunch of inquiries in a short timespan) are generally grouped together by lenders later on when you apply for a new account so several more inquiries won't hurt you at this point.

Re: Should I bother refinancing a private student loan with about 2 years left?

TheRedHat — Thu, 15 Jun 2023 01:45:25 GMT

With a score range from 720 to 725, maybe consider doing balance transfers at 0-2% for 12-15 months with credit cards and paying it off that way? Or even better, do a combination of the two. Just a thought.

Re: Should I bother refinancing a private student loan with about 2 years left?

MeredithLepore — Fri, 23 Jun 2023 16:45:41 GMT

Without a prepayment penalty, it would make sense to refinance. With a consolidation loan, you could get a lower rate and simplify the prepayment process.