College students usually apply for student loans during college to cover expenses like tuition fees, books, research, projects, educational tours, etc.
There are many sources available that offer student loans. Aside from that, students can easily get a loan by getting a creditworthy cosigner. Most students don’t have enough credit history to get a perfect credit scoring, so they need cosigners.
Having a student loan can affect your ability to have higher income, save for retirement, or qualify for other types of loans. However, you can avoid it by making use of tools and strategies that can help. One of the options you can use is refinancing a student loan.
When you refinance a student loan, you bring together multiple loans into one. The lending institution of your choice will pay off all your current loans and grant a new loan for the total amount of all your current loans.
Student loans can come from private lenders, U.S. Department of Education, or educational institutions. Your options for refinancing a loan depends on the type of loan combination, whether if its from private lending institutions or federal student unions.
One of the easiest ways to repay your student loan is through refinancing. Since you can consolidate all your loans as one instead of paying one loan after another, you can make use of the extra money to save and invest in real estate or any business ventures.
Lending institutions will likely approve a loan if they believe that such borrower has a strong likelihood to repay their loans.
GET APPROVED EASILY
Getting a student refinanced loan is the same with how to get a business loan. There are things you must remember to easily get approved to refinance a student loan. Consider these things, and you can get your student loan refinanced in no time.
Good Credit Score
In all types of loans, having a good credit score is a must. Though a stellar credit score is not the only criteria for getting your loans approved, you must still focus on polishing it. Your credit score is an indicator that you take your loans seriously and meet your financial responsibilities on time.
Quite a few lenders do not have a minimum or maximum credit score, but to make sure you get high chances for approval, it is safe to maintain a credit score of 700 or above.
Lending institutions would also evaluate your cash flow because it is an assessment of your ability to repay your monthly expenses. If you have continuous cash flow, it means that you have the funds to pay your bills, debts, and other expenses as well.
Aside from that, they will check your after-tax monthly income, excluding your mortgage payments, rent, other fixed expenses, and other debt obligations.
You will have a better chance to get the approval of your loan if you are employed or will be employed. Being employed is an indicator that you have a source of income to pay your debts including your future loans.
Lending institutions want to make sure that you can repay your loans. Other than that, they also want to make sure that you are not on the verge of bankruptcy or fallen behind on any existing loan payments.
If you are currently employed and is generating income. You need to show proof of stable and recurring monthly income or payslip from your employer. Lending institutions want to make sure that you have enough income to pay your student loans.
One of the crucial types of financial ratios that lending institutions evaluate is the debt-to-income ratio. To compute your debt-to-income ratio, you compare your total monthly income with your total monthly debt payment.
For instance, you get an income of $20,000 for the month and a $5,000 expense also, then your debt-to-income ratio is 25%. To get a high chance of approval based on your debt-to-income ratio, you need to lower it.
Other Debt Obligations
Aside from the refinanced student loan you are about to get from a lending institution, it would be better to inform your lender about any existing obligations you have. Lending institutions want to know and understand what other obligations you have. This includes credit card debt, mortgage, car loan, auto loan debt, and other forms of debt.
Get a Qualified Co-Signer
Most students have less or don’t have any credit history. Thus, lending institutions cannot assess their credit scores accurately. Getting a qualified cosigner can make a difference. A co-signer can be your parent, grandparent, or your spouse. With the help of your co-signer, you can get the approval of your refinanced loan.