Many of us have acquired student loan debt, including private and federal student loans, often with various lenders, at different terms and interest rates. Making payments to each individual lender at different times of the month is time-consuming and confusing. Consolidating all your loans into one new loan is an easy way to simplify the repayment process, making just one payment to one lender. And instead of having different interest rates your new single loan has just one.
Rates for student loan consolidation varies from one type of loan to the next, as well as from one lender to the next, so seeking out the best student loan consolidation rates is in your best interest. A way to understand exactly what an interest rate is, think of it as the total it costs you for the money you have borrowed, broken down into monthly amounts. By obtaining the lowest rate, you have lowered the overall cost and the difference is the money you will save over time. There are other things to consider though.
If you want or need to lower your monthly payment, then consolidating your loans into one loan over a a longer repayment term is one way to accomplish that. But paying less each month will take longer to pay down your student loan debt. And because it takes longer to repay, in many situations, theextended prepayment terms means the total cost will be higher.
The loan terms on a consolidated student loan includes a fixed interest rate, meaning the rate you start with will remain the same for the life of the loan. Though all lenders will offer a fixed interest rate, the rate from lender to lender will not all be the same. That is why it is important to compare several private companies to determine who is offering the best terms, and the best interest rate. Being able to secure a loan at even a slightly lower rate can save you a substantial amount of money over the life of the loan.
Don’t just look at lenders that are easy to find. Some lenders who do business as non-profit lenders can sometimes offer lower interest rates because they have lower operating costs. No matter what, compare all your options, gather lots of rate offers before deciding which lender you should use. To try and get your business, all lenders will offer you a no obligation, free quote. With this information you will know which company and interest rate is best for you.
Before signing on the dotted line, ask the lender if there is any way you can save even more each month. Some lenders offer their customer a slight discount each month on the interest you pay if you use their automatic debit withdraw from your savings or checking account each month. By not having to hire the man-power to process the check you mailed in or made at the teller’s window, saves them money, and they will gladly pass those savings back to you. And some lenders offer a slight discount if you make timely payments consecutively over time. Asking the simple question, “how can I save more?” can go along way with adding substantial saving for you over the lifetime of your loan.
When lenders want to entice you to get your business, they will offer incentives if you consolidate your student loans. Sometimes though, these incentives are reduced fees or discounts for a very limited time. Make sure and do the math to be sure this is really beneficial for you in the long run. There may be a lender out there who offers something similar for the life of the loan, greatly reducing your bottom line over time.
Learning as much as you can about student loan consolidation will help you make better decisions. Is what they are offering better over time that what you have now? Is this the lowest price available in today’s market? Have you looked around enough to know you are getting the deal best for you? The surest way to save money is to find a loan that offers a lower interest rate than the one you have right now. Adding on any discounts or lower fees will help you save too. Be sure and verify all the information the lender gives you. Make sure it is all true and accurate before you make any agreements, and if you are confused about anything, ask questions.
