Refinance Student Loan
Refinance Student Loan:
Make Your Monthly Amortization More Affordable
People fresh out of college suddenly find themselves overwhelmed by debts. Not surprising considering the fact that most people borrow heavily while they are in college. How they will eventually pay for their financial obligations once they get out of school is pushed to the back burner.
If you are of those people who fell into the trap of getting more student loans than you could afford, you may find yourself in big trouble six months after graduation. When you start paying for your student loans reality will set in.
Fortunately, there are ways of getting off the hook without really damaging your credit standing. One of the best ways to make your monthly loans amortization more affordable is to refinance your student loan.
There are many banks and financial institutions that are willing to refinance student loans so you will not have so many problems managing your obligations. You will get the financial help you need particularly if your credit is good.
What To Do Before You Refinance Your Student Loan
Before you run to the bank and refinance your student loan, you need to figure out how much money you can afford to pay per month. Figuring out how much money you can afford to pay on monthly loan amortization is very important in bargaining for better terms and conditions with the bank when you refinance your student loan.
To know how much money you can afford to pay, calculate your gross monthly income and then deduct your monthly expenses from it. Your monthly income should be bigger than your monthly expenses or else you are in big trouble.
Ideally, your monthly overhead expenses should not be more than 50% of your earnings.
From the remaining balance of your monthly income, deduct a certain percentage as savings. Ideally, your savings should not be less than 20% of your income.
However, not all of us are blessed enough to have that much extra money so you just have to settle for a smaller percentage. Hopefully, that percentage will not be less than 10% of your total earnings for the month.
The remaining amount of money from your monthly income after deducting your monthly overhead and your savings is you free portion which you can use to pay for your refinanced student loan.
As much as possible negotiate with the bank or financial institution to bring down the monthly payment on your refinanced student loan to this amount.
Refinance Student Loan