A student loan refinance calculator is an online tool that can help you determine the best loan terms to choose on your new loan. In order to do this, it must have a few basic features.
Before diving into what to look for in a student loan refinance calculator, it helps to understand what a refinance calculator is and how it works. So first – a look at how refinancing works.
How Refinancing Works
Refinancing is one way to change the terms of your student loans to better suit your current circumstances. It involves giving up your existing loan and taking on a new loan with all new terms.
Depending on your circumstances, you may want to lower or increase your monthly payments or your loan term. Alternatively you may want to refinance primarily because your high credit score qualified you for a lower interest rate.
When you apply for refinancing, the lender will set your interest rate based on the prevailing interest rates and your credit score. They will then offer you multiple loan term options and ask you to choose one that suits you best. In this case, loan term refers to the time over which you commit to paying back the debt.
Although loan terms may vary among lenders, most terms are 5, 10, 15, 20, and 25 years. You have to be very careful when choosing a term when you refinance. The term you choose will determine 3 major aspects of your loan – how much you pay by way of accrued interest, the amount of your monthly payments, and how long you’ll take to pay off your debt. This is where a student loan refinance calculator comes into play.
How A Student Loan Refinance Calculator Can Help
Consider these two scenariosâ€¦
Scenario 1– You’re earning a generous income and want a shorter loan term when you refinance so you can clear your debt earlier. But choosing a shorter loan term will increase the monthly payments. This is because the only way to pay off an amount in a shorter amount of time is by increasing how much you pay back every month. This is where you have to be very careful. Choosing too short a loan term will cause the monthly repayments to shoot up and become unaffordable.
Scenario 2 – You’re struggling financially and can’t afford the monthly payments. You want to refinance to extend the loan term, which automatically lowers the monthly payments so they become more affordable. However, you want to be sure not to choose too long a term as this gives the interest more time to accrue and will end up costing you thousands more in interest over the extended loan term.
In both scenarios, you have to estimate your monthly payments in order to determine which loan term saves you the most money. This involves several calculations using not just different loan terms but also different interest rates offered by different lenders. Think about how long this could take!
Doing the calculations manually could take anywhere from several hours to a couple of days to figure it all out. Not to mention the sheer frustration of it all. An easier, simpler, and definitely more efficient way to estimate your payments is by using a student loan refinance calculator.
How A Student Loan Refinance Calculator Works
A student loan refinance calculator is designed to calculate your estimated payments based on the information you provide it. The interface of the calculator has various sections. Each section has specific prompts. You enter the relevant information into each tab and the calculator does the calculations behind the scenes and displays the results in less than a minute. The tool is free to use and you can perform any number of calculations.
The way the interface is set up makes it easy for you to perform multiple calculations using different values.
For example, when you enter the loan balance and interest rate, the calculator will quickly determine what your monthly payments will be when you choose 5, 10, 15, or 20 year loan terms.
Alternately, you can enter your preferred monthly payments and the calculator will quickly calculate how long it will take you to pay off your loan. It will also tell you how much you’ll pay in accrued interest.
By changing the various values such as monthly payments, interest rates, and loan terms, you can determine which terms will save you the most money.
What Features Should You Look For In A Student Loan Refinance Calculator?
Ideally, you should look for a student loan refinance calculator that allows you to enter the values relevant to your current loan and your desired loan.
Under current loan, it should include tabs for:
- Current monthly payment
- Loan balance
- Number of years remaining to pay off your debt or current interest rate (providing information on any one of these automatically calculates the other)
Under desired loan, it should include tabs for:
- Refinancing goal – this could be either reduce monthly payment or reduce total loan cost
- Rate type – Choice of fixed or variable rate fees.
- Your preferred loan term – Choose from 5, 10, or 20 years
- Credit score
After you’ve entered the necessary information in the relevant boxes, the calculator will instantly show you the best loan match for you. It will also show you your estimated new monthly payments, estimated monthly savings, and loan cost plus interest.
RaptroFi’s Student Refinance Loan Calculator takes convenience and efficiency one step further. When you find the best lender and loan terms for you, simply click the â€˜Get This Loan’ button and you’ll be taken directly to the lender’s page. Here you can find more details, see how much you can save, and apply for refinancing right away.
With the right student refinance loan calculator, such as the one found on RaptorFi, you’ll be able to complete all calculations, find the best loan terms for you, and apply for refinancing within minutes.