Are you finding it hard to repay your existing medical loan in Singapore?
Are you looking to refinance your student loans?
But have you considered comparing student loan refinancing rates and the consolidation offer?
Before you sign the agreement, you should compare student loan refinancing and consolidation offers.
Because once you refinance with the help of a private lender, you can repay your federal education loans, but you can’t go back to avail yourself of all the benefits of having a federal student loan. Don’t worry.
We’ll help you paint a clear picture of the benefits and drawbacks of having a private loan and consolidating federal loans.
So without further ado, let’s get started with the refinancing rates and other things so that you don’t find it much hard to pay the medical loan in Singapore.
Comparison Of Interest Rates
Students always take the refinancing step to save money while repaying their student loans. But things are not as simple as they seem to be on paper.
You might have heard that refinancing a private loan will result in lowering your interest rates, but it’s not like that in every situation.
Consolidation loans might have had lower interest rates over the past few decades; the number ranges from 3%-5% on average.
You need to have excellent credit to achieve lower interest rates from the best refinancing companies in the country. It’s hard for even refinancing companies to offer interest rates lower than 3% in many cases.
If you don’t have great credit and a high debt-to-income ratio, you can ask a co-signer to increase your possibility of getting a lower interest rate loan from a private lender.
You need to ensure that your private lender has the co-signer option and has the relevant terms and conditions to save your money in the repayment process.
If you cannot get the interest rates lower than the existing federal loan, you should not proceed with the refinancing company agreement as you’ll only put a burden on your financial goals.
Another important factor is the duration of your loan repayment. Let’s discuss.
Comparison of loan repayment duration
Once you decide to lower your minimum installments with the consolidation, federal consolidation will increase the time duration of your loan in contrast to the minimum installment.
It will result in increased interest rates over the repayment period, and you’ll end up losing a lot of extra money from your earnings to repay your student loan.
You can extend the repayment duration up to 30 years with the federal consolidation, and the shortest length is ten years. You have to select one selected repayment duration while processing your loan application. You can also update it in the latter half of the payment process.
But things differ a bit with the private refinancing offers. You can select a five-year option to repay your student loan, or some private lenders may give you the option to choose a specific time for the loan repayment.
You get more options with the loan repayment length with the private refinancing companies compared to federal consolidation.
The quicker you repay your loan, the lower the interest rate you’ll be charged. But if you are considering repaying your loan beyond ten years, you don’t need to switch to refinancing.
Stick to the federal consolidation loan as the option of choosing a refinance is to minimize the interest rates and save your money. But if the repayment duration is the same for you in both cases, don’t switch to refinancing.
Refinancing is ideal for you only if you repay the loan quickly within a shorter repayment span.
Now let’s talk about the specific benefits of both the repayment options to understand the topic completely.
Benefits of refinancing
Once you are done with the specific technical measures for considering both the repayment options, you need to consider all the benefits of refinancing first.
If specific lenders offer you special offers and discounts on your refinancing loans, you can consider them your ideal refinancing option.
No doubt, the federal banks also provide offers on loan repayments, but refinancing companies take a step further with the list of benefits. They can provide additional rate reduction discounts and other vital benefits that can assist in repaying your loan with less financial burden and lower interest rates.
Some companies also offer special perks for specific borrowers to allure and encourage more people to choose them as their loan service providers.
If you feel that your refinancing company is offering you great benefits, then it’s no harm in choosing them for your refinancing student loan service.
Benefits of federal loan consolidation
Refinancing can offer a lot of perks, but there’s a lot on the losing side as well. That’s where a federal loan consolidation can get you covered.
You won’t get an option of income-based repayment with a private refinancing provider. Also, most private lenders are fixed with the terms and conditions you selected during the initial agreement; you cannot change in undesirable dynamic situations.
But if you stick with the federal loan consolidation, you can change the repayment plan whenever you want to.
You also get multiple protections with a federal student loan because it prevents easing the burden when there are certain situations like:
- You declare bankrupt
- You die
- You encounter an accident and cannot work
- Your school got closed and shut down for some reason
- Your school falsely considered you eligible for the loan
And many other such undesirable situations.
A federal consolidation loan will help you get some relief from the loan repayment in all these cases compared to a private lending company.
Now that you are aware of both sides of the coin, it’s time for you to make a wise decision.
It’s time to save your money
You need to understand your budget, your financial condition and then decide whether you want to go ahead with the refinancing decision in Singapore or not.
Understand all the benefits and drawbacks of both the options and try to pay off your loan quickly and wisely to pay a minimal interest rate to the financial institutions.
Repay your student loan, build your financial assets, and fulfill all your desires with well-informed decision-making. There are lots of platforms like Meesho that can help you to earn extra income. To start earning with ease, you can also use the Meesho referral code to get cash bonus.