What Does Dave Ramsey Say About Student Loan Consolidation And How To Do It?
It can be pretty disheartening to find yourself stuck in debt, while you’re wishing that the repayment can be done on time. And unfortunately, you will find by doing a search like, “declaring bankruptcy reddit” that you cannot often file bankruptcy to discharge student loan debt. This is usually the case in instances where there are outstanding student loan payments that you want to settle before the interest begins to compounds and blows beyond proportion.
In such an instance, the best way out is to seek to refinance a new loan with a much better interest rate to get rid of the existing student loan payment.
Thinking of getting refinancing on your student loan but you’re confused about the working of the process? Then read the outline below to get helpful information.
What Does Dave Ramsey Say About Student Loan Consolidation?
Dave Ramsey does not agree with many types of debt consolidation. That said, Dave Ramsey approves of student loan consolidation in a couple of unique situations. Firstly, are you going from a variable interest rate to a fixed interest rate? If so, Dave Ramsey would approve of that in certain situations.
Secondly, are you getting a lower overall interest rate? If so, you may receive Dave Ramsey’s approval there.
1. Consider whether you should opt for student refinancing or not?
Before opting to consider student refinancing, you should first try and see if refinancing can help you to reduce the cost of payment, and help save to total amount you’ll be paying. This is due to the fact that not everyone can benefit from refinancing their loan.
To qualify for a student loan refinance, you should have a good credit score to get the best rate possible.
Also, you should use forums to help you understand what people before you have done when deciding whether to refinance their student loan debt. For example, try Googling, “should i consolidate my student loans reddit” and you can understand what others have done before you.
2. Check your Credit Score for Student Loan Consolidation
You won’t be asked for your credit score when the Department of Education wants to issue you a student loan. However, private lenders will check your credit score when you’re applying for a student loan. This is important for the lender as it’ll help them to predict those that’ll likely pay, and those that might default on payment.
When you’re applying for a student loan refinancing, the lender will require that your credit score rating is at least 650. You will have an even more improved interest rate if you have a higher credit score.
3. Research on the different kind of lenders available
Loan terms differ from one lender to another. As such, you have to research first to find out the lender with the package that best suits your needs. Normally, you should pick a lender with an interest rate and fees that fall within a figure that’s within your budget after using the student loan calculator to calculate what you’ll spend. This helps you to have a much broad idea of what you’re getting yourself into that.
4. Compare the Different Student Loan Refinancing Terms and Rates
When you’re looking for an ideal lender, you should consider different aspects which include:
· The interest rate—Is the interest rate you’re offered a fixed or a variable one
· Flexible payment—do you have room to apply for hardship leniency when you’ve lost your job? You can reschedule your payment schedule and amount if you’re resuming your studies.
· Term of Loan—what’s your preferred duration for paying up the loan?
· Fees—are you going to be charged for application or origination fees? Are there prepayment penalties?
Since the goal of refinancing is to reduce your payment interest rates and their term, you should go through the offer to ascertain that the result of what you’re agreeing to is just that. When you go through the details of your offer, you can be certain that you’re opting for an excellent deal.
5. Finish the Application Process
When you’re okay with the terms you’re offered by a creditor, your next step is to submit the necessary documents that you’ll need to complete your application. Even in an instance where you’re prequalified, this is a necessary step. Also, you will be asked to provide some information about your current loan, and documents like:
· Proof of residency
· Government-issued means of identification
· Payoff or loan verification statements
· Proof of employment
· Your college degree
· The name of educational institutions you attended
· Proof that you graduated from the acclaimed institution
Although most lenders will not ask you to submit those details, some may require them. They may also request that you grant them permission to verify your current interest rate.
6. Sign The Last Documents
When the creditor has accepted your request for student loan refinancing, the new lender will pay your current loan. However, prior to this, you’ll be asked to sign numerous documents that you’ve accepted the terms offered by the loan. When you’ve signed the final disclosure documents of the loan, a three-day rescission period begins. Within this period, you’re in a position to cancel the refinancing agreement on the student loan if you no longer consider it as a viable alternative.
Nevertheless, the process takes some time before it’s finally concluded, and while waiting for the approval to be done, you should continue to make loan repayments to prevent a situation that will affect your credit score or attract late fees.
Takeaway
You may need student loans to cover your expenses while studying. However, the moment you graduate, it can be pretty difficult to settle in as you might also have other creditors you owe. Fortunately, you can opt for refinancing to consolidate all your debt to make payments a lot simpler. In the long run, this may also help you save money and attract a much lesser interest rate.