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Bad credit student loans are a reliable source of finance. With expenses going up everyday, students are turning to bad credit student loans more and more. But the majority of students do not pay heed to the refinancing options for bad credit student loans and they definitely should as a lot of money can be saved by this means.
In fact, refinancing of bad credit student loans is a very productive process by which the students can save thousands of dollars over the course of their repayment. When students borrow money from the federal government or a private company to pay their college fees etc., they do not usually pay attention to where the money is coming from, what the interest rate is, and how much they would end up paying back. They could easily avoid too big a drain on their account by taking special care of these things.
So, If you are really interested in refinancing your bad credit student loans and save money in the process, you must pay attention to these simple but important facts:
Refinancing Requirements
In order to qualify for refinancing and consolidation of bad credit student loans, the borrower must be currently in the loan “grace period”, at least for the first six months after finishing college. And even if the actual repayment period has started, a student must have at least $1000 in existing federal student loan debt to qualify for refinance.
If you have already refinanced or consolidated your bad credit student loans, you are not eligible for refinancing again, unless you have received a new student loan since the time you refinanced or consolidated. Thus, unless incurred in new debt, refinancing is out of the question if you already obtained this benefit before.
If you are already repaying your bad credit student loans, you can still take advantage of the benefits of refinancing your student loans. Keeping this in mind, many banks, credit unions, and lending companies offer programs for borrowers who are already making their payments.
Different Federal Loans
Under the U.S. federal system, there are two types of bad credit student loans. One is the Federal Perkins Loan and the other is the Federal Stafford Loan. The Federal Stafford Loan is available as both a subsidized and an unsubsidized loan, depending on the needs of the student. It is available to all students at an affordable interest rate determined at the time of the loan approval.
However, you may not have been aware of the interest rate on a standard Stafford Loan. The maximum interest rate on a standard Stafford loan is 8.25 percent, and that may be what you're currently paying. But the market interest rate could be at 4.875 percent - nearly half of what you're paying. You may have been unaware of this and you could have been saving a lot of money. If you haven’t refinanced before or if you have acquired a new loan, you’re still on time!
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