Refinance of Student Loans – What You Need to Know

Your Main Goal

Before you begin thinking about how to refinance your student loan, think about what your real goal is. Most people in your position will want to reduce their monthly costs. Others may simply want to consolidate all their loans into a single payment. Whichever way you go, you’ll want to set a goal before you begin planning.

That said, when you refinance your student loan there are several things to consider.

First things first

Regardless of the lender you work with when you refinance your student loan, there will be certain qualifications you will have to meet. One almost universal qualification is that none of your outstanding loans are allowed to have what is called “in-school” status. In other words, you cannot be currently paying for your education with an active loan.

Another requirement is that many lending institutions set a minimum balance. That amount will vary from lender to lender, so make sure you know upfront what that balance is before you spend too much time with that lender.

Two ways to refinance your student loan

When you refinance your student loan you can reduce your monthly payments one of two ways:

  • Getting a lower interest rate
  • Extending the duration of your loan

Most people will try to get the lowest interest rate possible because this will mean you will pay far less in total interest costs by the time you have paid off your loan.

That said, if you can’t get the lowest interest rates you should consider the refinance of your student loan by extending the term of your loan. When you do this, your monthly payments will be lower. The downside is that the total dollars you pay for interest will be substantially higher. So, as stated above, you need to set your priorities before you begin implementing your plan to refinance your student loan.

Federal vs. Private Loans

Like many other people, you may have more than one type of loan; some being private loans and others being Federal loans. Because of the way Federal loans are structured, you can get a much lower interest rate on them than you can on private loans. On the other hand, private student loans are basically personal loans made with the assumption that your income will increase with more education.

That said, make sure that you refinance these student loans separately. If you consolidate these types of loans into a single package, you may find yourself paying much more on the combined loans than you need to.

Your Credit Score

Before your refinance a student loan be certain that your FICO score is high enough to make you a solid bet to the lending institution of your choice.These days no one has an excuse for not looking at their credit report — you can get a free copy of it every twelve months from each of the three major credit reporting agencies. Do it now. Then take the time to review your credit report. If you find inconsistencies or problems, clear them up now. It will pay off in lower interest rates and better terms when you finally refinance your student loan.


Ultimately when you refinance your student loan, your goal should be to make your career — and the rest of your life — more manageable once you leave school. Be intelligent about investigating all the choices you might have before you make an informed decision. If you’re careful, you won’t be bogged down for the rest of your life paying back your loans.


Payday Loans Vs Logbook Loans

In recent years two new loan products have become more and more popular in the United Kingdom – logbook loans and payday loans.

Both advances are short term in nature and don’t require a credit history check to be approved. Both loans also charge a rate of interest on the loan amount that’s somewhat higher than that offered by traditional financial institutions.

As such both products are also aimed at the same market – that is people who don’t qualify to borrow from traditional institutions – usually because they’ve got a credit rating that’s impaired.

This is perhaps where the similarity between the two products ends. The two loans are dramatically different from each other in nature. The following is a comparison between the two:

Collateral used in the loan

When you borrow with a payday advance, the lender extends the amount to you against your next pay-check. This essentially means that you give the lender a post-dated check inclusive of the interest charged on the amount you’ve borrowed from the lender. The check is then cashed on your payday and your advance is cleared.

In the case of logbook loans, you borrow against a vehicle (can be a car, van or even a motorcycle) owned by you. The logbook loan requires your vehicle to be free or almost free of any prior financial finance. in good working condition and have proper insurance. The logbook loan also requires you to hand over only the logbook of your vehicle to the lender. You are allowed the use of your vehicle during the tenure of the loan. However, if you fail to repay the loan with in accordance with the agreement the lender can sell your vehicle in order to reclaim the loan amount.

Amount of loan

The amount extended by payday loans is often referred to as ‘cash advances’. The amount you can avail through a payday loan is largely dependent on your pay-check. This makes the amount relatively small in nature. It’s extremely difficult to borrow a significant amount of cash loan via payday loans.

The logbook loan lender has the capacity to extend a loan up to 75% of the value of the vehicle you own. Logbook loans can range anywhere between £500 and £50,000. The amount extended in a logbook advance is usually a combination of the worth of your vehicle and your estimated capacity to repay the loan.

Rate of Interest

The tenure of a payday advance is rarely more than thirty days. Because of the short term nature of this loan, the rate of interest charged on such a loan is designed to give the lender maximum benefit in the shortest amount of time. This means that as a borrower of a payday loan you realize that you are paying the lender a significantly larger amount than you borrowed owing to the high rate of interest charged.

The logbook loan has a rate of interest higher than that charged by traditional financial institutions. But when you compare the rate of interest charged by logbook loans to those charged by payday loans, logbook loans can charge a significantly lower rate of interest thus, saving you a lot of money you would otherwise end up paying as an interest on a payday loan.