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Do This if You’ve Already Refinanced Your Student Loans – Buffalo News

The good thing about extending your term when you’re close to payoff is your payment will probably be much smaller. The bad news is your total costs will likely increase.

For example, say you have $16,000 and three years remaining on your 4%-interest refinanced student loan. If you refinance again and get a 2% interest rate, but extend to a 10-year term, your payment will go from $472 a month to about $147 a month — a $325 difference. However, extending the loan term will cost you nearly $1,000 more overall due to interest accrual.

But if you have $64,000 and eight years left at 4% interest, you could refinance for 10 years at 2% interest and still save money: $191 a month and $4,224 in total. If you refinance for a shorter term, say, five years, you’ll save much more overall, but your monthly payments will increase. You’ll pay about $342 more each month and save $7,584 in total.

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