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Consumer Financing Student Loan Faq
Financing Student Loan
Most likely not. If you have a Federal student loan, you can’t transfer it. You will need to begin the process of a new student loan application.
If you have a private student loan, you will need to consult your lender as each has their own terms and conditions.
Whenever you are applying for credit, such as a student loan, the lender will do a “hard” credit check to determine your credit worthiness. This hard credit check will reduce your credit score slightly.
However, if you demonstrate consistency of on-time payment of your student loan, this is positive for your payment history component of your credit score and should improve it.
Note that with a student loan, you have assumed additional debt. This will affect your debt-to-income ratio. Lenders review this percentage to determine whether your available income allows you to pay off the debts that you have.
Yes, but your lender and loan terms will be limited. Most private student loan lenders require that you have successfully completed a 4 year degree as part of a loan refinancing. This is primarily a matter of risk avoidance. If you have graduated, you have greater financial potential to repay a loan. If not, the terms of any refinance loan will be less attractive.
Most students have not established a credit history, so this is not unusual. In this case your private student loan lender will likely require a cosigner on the loan to serve as a guarantee of repayment. Often the cosigner is a parent or relative.
Once you have established your own credit history, there are ways so that you can have your cosigner removed.
Yes. If you have the credit history and income to meet the student loan lender loan approval guidelines, there is no need for a cosigner on the loan. However, even if you do qualify, your student loan lender may advise you to consider a cosigner to add to the loan application to improve the loan terms (e.g., interest rate) and reduce the overall interest cost of the loan.
Student loan refinancing is when you take out a new student loan to pay off an old (one) student loan.
Student loan consolidation is when you take out a new student loan to pay off the combined debt of more than one student loan.
The purpose of either is to either: a) extend the term length of the new student loan to reduce your monthly student payment; b) lower the interest rate of the new student loan to reduce your interest costs; c) if the new student loan interest rate is lower you can apply more of your monthly payment to the loan principal, reducing the time needed to pay off your student debt.