Choosing the Right Student Loan Company Can Save You Thousands

Thinking about taking out a student loan? If so, the choices you make now can have a big impact on your financial future. Total student loan debt has climbed to $1.5 trillion with 44 million borrowers across the country. Furthermore, an estimated 8 million Americans are paying more than they have to on student loan interest. Let’s find out how you can avoid overpaying. The good news is that it’s much simpler than you think.

How Much Can I Save?

By shopping for the best interest rates on student loans your savings can be significant. Let’s say you take out a loan for $50,000 at 6% interest to be paid back over 120 months. Your total payment would be $66,612. Now if you found a less expensive loan, for example, at 4% interest, then your payment would be only $60,747. The total savings would be $5,865.

The real life numbers are even more impressive. It’s been shown that current student loan holders could be overpaying as much as $18,000 each over the life of the loan. That’s some serious cash.

Why People Overpay on Student Loans

Some borrowers might simply be in a hurry thinking, “No big deal. I have plenty of time to pay back the loan.” Since they don’t take their time, they rush through the process without comparing rates. This kind of reasoning, however, can lead to larger monthly loan payments in the future.

Others might be willing to take their time and compare companies, but they end up getting frustrated. Going from lender to lender is time consuming. There are forms to fill out, and you have to wait for a reply. Plus, after one or two rejections, these borrowers might end up willing to take out a loan with any company that accepts them.

The answer to these obstacles must be a solution that is fast and thorough. Is there a better way?

Student Loan Shopping

Today, online multi-lender marketplaces have made the process incredibly easy, even for those in a hurry. These platforms contact the lenders for you, and they can even personalize the process to fit your situation. You simply answer a few questions about yourself, and within minutes you have a list of prequalified rates to choose from.

This is not only the fastest way to get personalized information, but it also ends up saving you money. Lenders compete for your business so they offer competitive rates. As we saw previously, even a small difference in interest rates can lead to thousands of dollars saved over the life of the loan.

Conclusion

It’s very common today to require a bit of financial help to pay for school. Make sure you take advantage of the tools out there that can save you money. Later, when you have to pay back the loan, you’ll be thankful you shopped around.

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