College loan consolidation is sometimes an option to reduce payments, lower the interest rate and simplify multiple loans management. There are however some things that you need to look into before you apply for loan consolidation. First of all, know the dos and don'ts, or the advantages and disadvantages that define your current individual condition. No matter how nice it sounds when you read a consolidation ad, lenders have little interest in exposing you the downsides. Do your homework, and only then consolidate your student loans!
1. Don't consolidate federal and private loans together, because chances are that you won't reduce the costs as you expect, quite the contrary. Always choose federal college loan consolidation as separate from private loan consolidation.
2. Carefully consider the life extent of the loan. Every consolidation enables you to cut down on your monthly expenses, however, it prolongs the life of the loan from 10 to 30 years. Half of your lifetime, you'll be paying for your education. Do you make savings on the long run? That's the kind of information you need to check.
3. There are numerous free services that provide consultancy on college loan consolidation. In addition to these, you should contact the lender right away in case you have troubles covering the monthly payment. Some lenders offer forbearance and deferment benefits, and these benefits could very well work as alternatives to consolidation.
4. Lenders compete fiercely on the consolidation market. And you can use this competition to your advantage. First of all, you need to find out whether lenders offer discounts for good behavior. By good behavior we here refer to a certain number of consecutive on time payments and the agreement to allow the lender to deduct the rates automatically from your bank account. Many lenders will cut on your interest rate by a quarter point and reduce the rate by 1% for such cases.
5. Watch all of your expenses carefully. Looking into college loan consolidation is not enough if you are a loose spender. Debt accumulates from many parts not only from college loans rates. Credit card debt could be one other problem that you need to keep under control or avoid altogether. Therefore, firm management of your finances brings serious rewards and enables you to pay on time as well as make savings to cover the loan in a shorter period of time.
Consider your situation carefully before turning to college loan consolidation as the best solution!
1. Don't consolidate federal and private loans together, because chances are that you won't reduce the costs as you expect, quite the contrary. Always choose federal college loan consolidation as separate from private loan consolidation.
2. Carefully consider the life extent of the loan. Every consolidation enables you to cut down on your monthly expenses, however, it prolongs the life of the loan from 10 to 30 years. Half of your lifetime, you'll be paying for your education. Do you make savings on the long run? That's the kind of information you need to check.
3. There are numerous free services that provide consultancy on college loan consolidation. In addition to these, you should contact the lender right away in case you have troubles covering the monthly payment. Some lenders offer forbearance and deferment benefits, and these benefits could very well work as alternatives to consolidation.
4. Lenders compete fiercely on the consolidation market. And you can use this competition to your advantage. First of all, you need to find out whether lenders offer discounts for good behavior. By good behavior we here refer to a certain number of consecutive on time payments and the agreement to allow the lender to deduct the rates automatically from your bank account. Many lenders will cut on your interest rate by a quarter point and reduce the rate by 1% for such cases.
5. Watch all of your expenses carefully. Looking into college loan consolidation is not enough if you are a loose spender. Debt accumulates from many parts not only from college loans rates. Credit card debt could be one other problem that you need to keep under control or avoid altogether. Therefore, firm management of your finances brings serious rewards and enables you to pay on time as well as make savings to cover the loan in a shorter period of time.
Consider your situation carefully before turning to college loan consolidation as the best solution!
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