Education loan refinancing refers to the process of taking a new loan to pay off your old education loan by replacing your existing loan with one that has more manageable terms, such as lower interest rates, reduced EMIs, or extended repayment periods.
This article covers everything you need to know about how education loan refinancing works, when to consider it, and how it can ease your financial burden.
Why Do Borrowers Opt for Education Loan Refinancing?
Here are some reasons why borrowers usually choose education loan refinancing:
- To reduce monthly payments
- To get a lower rate of interest
- To switch from a variable to a fixed rate or vice versa
- To get a longer repayment period
- To manage multiple loans in one
Refinancing an education loan depends on your financial situation and your plans for the future. Some refinance early, and some prefer to wait for a steady income.
How Does Refinancing Student Loans Work?
The following points help you understand how refinancing student loans works:
- Step 1: Apply for a new loan with a different provider.
- Step 2: The provider reviews your credit history, income, and repayment record.
- Step 3: If approved, they pay off your current student loan.
- Step 4: You then start repaying the new loan under the new terms.
Things to Consider Before Refinancing Your Education Loan
The following are the things you should consider before you refinance your education loan:
Check Eligibility
Providers check your income, repayment history, and current loan balance. Students who are already repaying or have completed their course can apply.
Compare Options
Research several education loan refinance options. Compare their repayment terms, processing costs, and interest rates.
Choose the New Loan
Select the loan that suits your financial goals. Check for flexible repayment options and good customer support services.
Apply for the New Loan
Submit your documents, such as income proof, ID, current loan details, and academic records. Some providers may also ask for co-borrower details.
Loan Disbursement
Once approved, the new loan amount is used to repay the old loan. You now start repaying the new loan as per the new terms.
Conclusion
Education loan refinancing can be helpful when your existing loan terms no longer suit your financial needs. It allows you to restructure your repayment plan for better manageability. Before opting for refinancing student loans in India, review your documents carefully, compare available options, and understand all terms and conditions to ensure smoother future repayments.
Disclaimer
As of March 31, 2024. T&C apply.
Credila Financial Services Limited (Formerly known as HDFC Credila Financial Services Limited)
The education loan facility provided by Credila Financial Services Limited ('The Company') will be at the sole discretion of the Company and within the Company's prescribed credit and underwriting norms/guidelines prevailing at the time of processing and disbursing the education loan. The Company maintains the right to change the interest rate at any time and at its sole discretion, without prior notice.
