Whether you
attended a public or a private college or university, you probably owe tens of
thousands of dollars or more in student loan debt. If you are like millions of
other graduates, you chose to fund your education with private student loans.
Private student
loans differ from federal loans in that the private loans are issued by private
banks and other lending institutions. Private loans may be offered at variable
or fixed rates and come with a range of possible repayment periods (terms) like
5, 10 or more years.
If you have
multiple private loans, you may be interested in consolidating your loans into
a single private consolidation loan.
Advantages To Loan
Consolidation
The main benefit of
consolidation is that it gives you the opportunity in most cases to reduce your
monthly payment obligations. Being able to save money each month on student
loans offers a huge benefit to graduates who hold a lot of debt. Most graduates
- especially those in their 20s and early 30s - are busy trying to pay their
monthly expenses while building a small nest egg. High loan payments but a
serious damper on that goal.
Another benefit of
consolidation is the opportunity to simplify one's financial life. Having to
make multiple payments to different banks each month - which are due on
different dates and in different amounts - is no piece of cake to manage.
Comparing Private
And Federal Consolidation Options
Note that if your
current student loans are federal loans, you should opt for federal
consolidation. Otherwise, private consolidation is the way to go.
3 Tips For Private
Education Loan Consolidation
If you are
considering consolidation, here are 3 tips for you to consider:
1. Shop The Best
Bank Rate: Just shaving a point or two off of your interest rate can save you
a lot of money in your future consolidation loan payments. It is always worth
it to spend a bit more time now shopping the rates from multiple lenders before
settling upon one.
2. Check Each
Company Out: Do research on each lender to make sure they are viable and represent a
company you would want to do business with. For example, ask these questions:
Do they have the ability to service your loans? Do they allow for easy online
application? Are their repayment plans simple and easy to understand? Do they
offer any benefits to borrowers who pay on time? Keep meticulous notes about
each lender you evaluate.
3. Get The Payment
Terms You Want: Before contacting lenders, make sure you know what your idea payment
terms are. Remember: a longer term of, say 20 or 30 years means lower monthly
payments now but much more paid over the life of the loan in interest costs.
Tip: choose the shortest term possible while still leaving you with a monthly
payment you can afford now.
Follow these 3 tips
to a more successful loan consolidation.
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