I currently have 22k in student loans at 6.55% interest. I checked my credit score and it was 706 a couple of weeks ago. I am a recent college grad with a decent paying job right out of college. What do you think the likelihood is that I can get a loan to pay off my student debt at a lower interest rate?
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It is common, but usually to get a better rate, the loan has to be collateral backed. You often see home-owners taking equity loans to consolidate other debts to lower the rate because those loans are secured by the mortgage.
I've seen some signature loan rates at 5% for 750+ credit scores, so it wouldn't hurt you to talk to a credit union and make the case to their loan officer, but those lower rates are going to be paired with shorter terms. With anything but a mortgage, your payment would likely be significantly higher, which would not be a bad thing for getting out of debt, but it could be a problem if you have any income shocks.
answered Dec 19, 2013 at 17:11
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I have a bit of complexity to add to the OP's question. My student loans are broken up by the semesters I received them in. Each with their own interest rates. Could you edit this question to account for a situation like that? For instance, would a bank still need collateral if the loan was only 5k and they had to beat an interest rate of 8.1%?– RobCommented Mar 27, 2019 at 17:02
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1@Rob To figure it out, you simply have to look at the available rates for a signature loan from your local bank or credit union and compare them to the rates of other collateral-backed loans. My credit union offers signature loans for 8.5% variable rate today. If I took a loan on my car, I could get a 4.5% fixed rate. The current rates are dictated by economic conditions, but the spread between a signature loan and a collateral-backed loan (like the auto loan example here) will always be several points. Commented Mar 27, 2019 at 17:36