Most of us are more responsible now than when we were 18. So if you're still paying back a student loan you borrowed before you could legally order a cocktail, there's a good chance you qualify for a better interest rate.
That's where student loan refinancing comes in. It's a way to save money by taking out a new, lower-interest loan to pay off your existing loans. Here's how to do it:
Decide if it's right for you
Consider refinancing only if you're absolutely sure you can part with those federal loan perks or if you have private loans. It should especially pique your interest if your current rate is 6% or higher. To qualify, you need a credit score at least in the high 600s and enough income to comfortably afford monthly student loan payments and your other debts.
Scope your options
Refinance marketplaces are an easy way. Try NerdWallet's, which is powered by our partner Credible, or LendKey's, where you can compare refinance options from community banks and credit unions. With both, you'll fill out a single form to get rate estimates from multiple lenders, and your credit score won't get dinged. Not all refinance lenders participate in marketplaces, so consider lenders individually, too.
Submit an application
After you're accepted, the lender will pay off existing loans you choose to refinance and issue you a new one. Going forward, you'll make payments to the new lender.
That's the gist. To learn more, check out these questions to ask yourself before refinancing.
This article originally appeared on NerdWallet.
Teddy Nykiel is a staff writer at NerdWallet, a personal finance website. Email: teddy@nerdwallet.com. Twitter: @teddynykiel.
