Refinancing can be a smart solution to ease your financial burden. Know more further!
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Are the high EMIs of your education loan straining your finances? Refinancing can be a great way to solve this issue. Switch your loan provider and get a new loan to pay off your existing study loan. This can help you enjoy lower interest rates and more favourable loan terms. However, the process of refinancing comes with some considerations and limitations. Let’s look at education loan refinancing in detail and learn how to make the most of this facility.
Here are some reasons why individuals usually opt for refinancing:
Affordable EMIs
The lower education loan interest rates lead to a reduced EMIs, making it easier to manage your repayment
Extended Tenures
Get a revised tenure as per your current financial situation and repayment capacity
Flexible Repayment
Discuss and decide on a new repayment schedule that fits your needs
Better Customer Service
You can enjoy better customer support and service by opting for a new lender
Tax Benefits
You can continue to enjoy tax benefits under Section 80E of the Income Tax Act of 1961 even after you opt for refinancing
Here are some things to keep in mind when refinancing your education loan:
Timing Your Refinance
The sooner you refinance your loan, the better it is. It enables you to save on the total interest charge payable over the loan tenure. Most students opt for refinancing after completing their qualifications and getting a job. This ensures that they now have a stable income, improving their eligibility. It enables them to get better refinancing options with favourable terms.
Loan Terms
Check the interest rate, tenure, and other loan terms offered to you. Compare the options different lenders provide so that you get terms that suit your needs.
Academic Performance
When refinancing, your education loan eligibility is reviewed by the lender. For this, your academic performance and progress are taken into consideration. It shows your commitment and need for the qualification.
Foreclosure Charges
In certain cases, you need to foreclose the loan with your current lender for a refinance. You may have to pay additional charges for this. Ensure to take these into account when planning your budget.
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FAQs on Student Loan Refinance
Are there any fees associated with refinancing an education loan?
You may have to pay the application fees, origination fees, and prepayment penalties. So, review the terms of the new loan to understand the impact of these charges on your repayment costs.
What happens to my co-signer if I refinance my education loan?
When refinancing your co-signer can be released from the loan obligations if they wish. This depends on the new lender's policies. It can be beneficial for your co-applicant if they want to reduce their liabilities.
What is the CIBIL score required for an education loan refinancing?
While there is no set requirement, having a CIBIL score of at least 650 may be more beneficial for you. This can help you get lower interest rates and flexible repayment options.
How does refinancing affect my CIBIL score?
Applying for refinancing may cause a temporary dip in your CIBIL score due to the hard inquiry. But, if you make timely payments, it can positively impact your score over time and potentially get back to your original good score.
Can I refinance my loan if I am still studying?
Most lenders require you to be graduated and have a job before refinancing your loan. This is to ensure that you now have a better repayment capability. However, you may be able to refinance your loan on the basis of your co-applicant’s income and eligibility.
How long does the refinancing process take?
The refinancing process usually takes a few weeks. This timeframe can vary depending on the lender’s policies and your eligibility.
