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Lender incentives can save you big bucks when it comes time to refinance student loans. These are incentives offered to help save you money for refinancing with a particular company. Take these into account when deciding what you are going to do. A loan with a slightly higher interest rate but superior incentives could save you more money than one with a lower rate.
The most common lender incentives are based on making a certain number of consecutive on-time payments. These include rate reductions, cash-back, or principal reductions. The principal reductions are when a percentage of the remaining debt is expunged and you are no longer responsible for that portion.
There are also rate reductions associated with setting up automatic payments/debits in some refinancing packages. If you have alternative bad credit loans or any loans that have high interest rates, these incentives can make a big difference in the amount you have to pay back.
If you find a lender with a great interest rate but not the right incentives, contact them and see if they will implement any incentives for you. Who said you can't have your cake and eat it too?
|Jennifer Mathes, Ph.D.|