The Complete Guide to Refinancing Your SBI Student Loans in the U.S.
We all know student loans can be paid off with some good budgeting, discipline tons of patience. But, let’s be real. Everyone wants to pay off their student loans as fast and effectively as possible. Student loan refinance is one of the ways you can achieve this while saving a lot of money!
Below we take a look at what student loan refinancing is and how you can refinance your State Bank of India student loan in the U.S.
What is Student Loan Refinancing?
Student loan refinance is when you pay off your existing student loan (or loans) with a new loan that has better offerings. With refinancing, your new loan will usually have lower monthly repayments and lower interest rates.
Lower interest rates and monthly repayments don’t just mean your month to month budget will finally jump out of the red, but you will be saving in the long term. Having a lower interest rate means you’ll pay back less in the long run.
Usually, when you take out a student loan at the beginning of your studies, you don’t get the best deal. This is because you are a higher risk to lenders. You don’t have a steady income and the lender will only start getting its money back after you graduate. Not to mention the fact that most students don’t have a great credit score.
Once you’ve graduated, found a good job and had an opportunity to improve your credit score, however, lenders will see you as a lower risk meaning you get better loan terms. Most importantly, a better interest rate.
This all sounds great, right? The question now is – are you eligible?
How to be Eligible for Refinancing
Eligibility requirements for refinance loans will differ from lender to lender. Generally, lenders will look at a combination of the following factors to decide whether they will give you a loan:
- Credit score
- Credit history
- Debt-to-income ratio
- Employment history
- Financial behavior
- Residency status
There are lenders who don’t lend money to people who aren’t U.S. citizens or permanent residents. It’s best to not even try with these lenders if you are a visa holder. There are other lenders, like Stilt, who focus on providing loans to visa holders and immigrants and will be able to offer you a better loan.
Why You Might Want to Refinance Your SBI Student Loan
We’ve discussed why refinancing is a great idea in general. Let’s take a look at why you’d want to specifically refinance your State Bank of India loans.
4 Reasons SBI Probably Isn’t the Best Lender for You
You’re Paying Too Much in Interest Each Month
The problem with most student loans–not just the ones from SBI–is that the interest rates are based on student’s credit scores and histories at the time they’re applied for, not when they’re being paid back. This leads to many financially healthy borrowers paying their loans back at interest rates that do not reflect their current financial profile. It also leads to many people paying far too much in interest each month.
Awful Customer Service (Even at Physical Locations)
Customer service with Indian banks is generally poor and State Bank of India is no exception. Reviewers online have complained about everything from rude customer service representatives to hours-long wait times just to get answers to questions about their accounts. What’s more, some customers have complained that poor customer service even extends to their physical branches. If these reviews indicated anything, it’s that customer service, especially for those with student loans with SBI, is not a priority for the bank, and that’s just poor business.
The Exchange Range Costs You (and it Adds Up)
It’s no secret that the American dollar is much stronger than the Indian rupee. What a lot of borrowers in the U.S. who are repaying loans in India don’t think about, though, is how the exchange rate is increasing the cost of their student loans. Every time you make a payment back to India, you’re paying the exchange rate on top of it, and over the lifetime of a loan, those extra costs could accumulate into the thousands of dollars.
Variable Interest Rates Can (and Probably Will) Cost You More
State Bank of India only offers its student borrowers variable interest rates. This means the interest you pay back can and will change month-to-month, either dropping below the average or, more times than not, rising above it. The worst part of this, though, is that it does not negatively impact SBI, just it’s borrowers.
3 Signs You Need to Refinance Your Student Loans
Now you know all the possible benefits of refinancing your SBI student loan. The big question is – should YOU refinance your SBI student loan. Here’s how you’ll know it’s time to refinance.
1. Your Interest Rate is Way to Too High
This is the most telling sign that it is time to refinance. A high interest rate pushes up your monthly repayments unnecessarily. If you suspect you can get a better interest rate with another lender (especially if your loan is with SBI bank and you can get a better rate in the U.S.), it is definitely time to consider refinancing!
2. Your Repayment Terms are Unfavorable
If your current monthly repayments are killing your cash flow and causing too much stress, you might want to reconsider refinancing to get a better monthly repayment. If you refinance over a longer period, your monthly repayments will be lower (but you might still pay more interest over time). If you get a better interest rate, your monthly repayment will be better and you’ll be saving money in the long run.
3. You’ve Improved Your Credit Since Taking Your Education Loan
If you’ve been paying off your student loans for a while, chances are your credit score has improved. A better credit score almost automatically means a better interest rate and loan terms. So if your credit score has improved it is definitely time to refinance!
Can You Refinance State Bank of India Student Loans in the U.S.?
So, you’ve taken the decision to refinance your SBI loan and you want to make use of an American lender. Is this even possible? The answer is YES!
As we explained above, not all U.S. lenders are willing to borrow money to visa holders. You might also face a few obstacles with lenders who do. But, this it doesn’t all hope is lost.
Why It’s So Hard for Visa Holders to Refinance at American Banks?
Let’s take a look why you might face a few difficult obstacles in trying to refinance with American banks.
Ultimately, it all comes down to risk. If you are a visa holder on a short-term visa (like a student visa) you won’t be in the country for too long. If you don’t repay the loan while you are in the U.S., lenders have no way of collecting the money when you are out of the country. As student loans are usually large sums of money, this increases the chances of a student leaving the country before the loan is repaid.
Fortunately, there are lenders like Stilt who looks at factors other than your residency to determine whether you are eligible.
What is Stilt?
Stilt is a private online lender who focuses on providing loans to immigrants and visa holders. Stilt looks at eligibility factors like your physical presence in the U.S. and the fact that you have a U.S. bank account to determine if you qualify.
Since Stilt specializes in providing loans to visa holders, you certainly won’t experience as many obstacles in applying for a loan than with other banks.
How to Refinance Your SBI Student Loan with Stilt
Getting a loan to refinance a State Bank of India student loan in the U.S. is super simple.
You can apply online, which makes the process so much less complicated and tedious. Once you’ve applied, Stilt will send you an update on your application within 24 hours. If they need more info, they’ll schedule a quick verification call with you.
Your information and documents will need to be verified, but as soon as they’ve ticked all the boxes they’ll send you a promissory note to sign. Once you’ve signed, the money will be transferred to your account. It only takes about 2 to 3 days to reflect in your account, so you’ll be able to refinance in no time!
5 Tips for Refinancing Student Loans
If you are taking the step and refinancing, consider our tips for refinancing below to help you in the process.
1. Know Your Credit Score
Most lenders consider your credit score and credit history before providing a loan or offering you a rate. Some lenders also require a minimum credit score for you to qualify. You should, therefore, know your credit score before you apply. This will help you know which loans to apply for and also what terms you can expect to be offered.
2. Have Regular Income
Lenders want to know you’ll have enough money to repay your loan. The best thing would be to prove you have a steady, regular income. You’ll also need to prove that you have enough money to cover your living expenses after loan repayments. So check out your pay stubs and do the math!
3. Clear Other Debts
Having other debt will influence your ability to get a loan, as your total monthly debt repayments will be considered in determining whether you can afford another loan. So, if you want to apply for refinancing try paying off some of your credit card or mortgage debt first.
4. Understand Debt-to-Income Ratio
When you apply for a loan, lenders will require you to state (and prove) your income. Of course, lenders will be more willing to offer you a loan if your income is high in comparison to the amount you want to borrow (and your other existing debt). This is your debt-to-income ratio. When you have to provide your income make sure you provide your pre-tax income and you include all sources of income, as this will definitely help your loan application.
It is very important, however, to not lie about your income. If you lie about your income, you can face criminal charges. Make sure the amount you give to the lender can be proven with supporting evidence.
Have a Job
You’ll have to have a steady stream of income before you can apply for a loan. Getting a steady job will help with this. If you haven’t started with your job, but you have a job offer, this ought to be sufficient.
Just because your student loan is with the State Bank of India does not mean you can’t refinance it in America. Refinance your State Bank of India student loan in the U.S. – you could get better rates, terms and life will be so much simpler!