Nobody likes to spend a lot of time looking for student loans. The process can be frustrating and stressful, but there are ways to make the process much easier.
Not only can you get loans from private lenders faster, but you can also have confidence that you get the lowest interest rate.
Let’s find out how.
How Loan Interest Works
When you take out a student loan you borrow a certain amount of money to pay for costs like the room, board, and study supplies. That amount is called the loan principal. When you pay back the loan, you’re charged interest.
Let’s say you take out a $50,000 loan with an interest rate of 7%. To pay back the loan you have to pay back the original $50,000 you borrowed plus $19,665 in interest. If you agreed with your lender to pay off the loan over 120 months (called the loan ‘term”) your monthly payment would be $581.
The Power of Interest
Now let’s take the same loan principal in the example above but lower the interest rate to 4%. By reducing the interest rate, you would now have to pay back $10,747 in interest. That’s a big difference. Even if you only reduced the interest rate to 6%, you would still save about $3,000 in interest payments.
Get in Contact with the Right Lender
The key to getting the lowest student loan interest rate is to compare lenders. You could go shopping door-to- door, but this takes a lot of time. Plus, you would have to fill out a separate form for each lender then wait days for an answer. As we mentioned earlier, there’s a much easier method.
Today, web based multi-lender marketplaces put you in contact with many lenders at once. From the privacy of your own home, you answer a few simple questions about yourself, and the platform contacts lenders for you.
Within minutes you get a list of lenders willing to give you a loan. Since these companies compete with each other, they try to offer you the lowest interest rate possible.
The best part of this process is that you get actual prequalified interest rates tailored to your situation. These aren’t teaser rates or vague rate ranges. This means you can make an informed decision quickly since all the information is right there in front of you. A process that used to take days or weeks has been reduced to minutes.
Now you can compare lenders, and the marketplace puts you in contact with the lender as well. This is the most efficient method for getting the best student loan interest rate.