Payday loans is available in most states and many people are using the loans as a solution to emergency medical bills, repair cars and even deal with student loans. Consolidating student loans is when the student or borrower merges several small loans into one. Once your loans are merged, your lender will finance them and you will only have to deal with a single loan and not manage several small loans. Private student loans can be consolidated by replacing education loans with another loan. The main benefit of consolidating small loans into one is that you will only have a single monthly payment, unlike having small loans where you have to manage several small high interest loans.
The interest rate on private students are based on the ability to repay or creditworthiness. You are required to provide all the necessary documents to your lender to verify your ability to repay the loan. There requirements include
- A valid national identity card
- Proof of recurrent income or employment
- A working checking account
- You are not an active military personnel
- Loans from your previous learning institutions
How to find a good student loan consolidation program
When it comes to consolidating student loans, there are several options. You can get a new low rate conventional loan to pay off all your small debts and focus on paying the larger loan with a new interest. Alternatively, you can seek out a lender who will repay the loan for you and you will in turn pay the loan they give you. Your lender will act as the mediator between you and the creditors. You do not need to have stellar credit history if you are looking for a loan as long as you meet the minimum requirements of your lender.
- You can sign up for a new loan and your lender will clear all your debt and then you will be required to negotiate for a new interest rate with your lender.
- This loan type is better because it gives you a chance to monitor a single loan. It is unlike having to manage several loans which you may end up missing a repayment or defaulting. In this case, your lender will consolidate and pay all your existing loans on your behalf. They will negotiate a better interest rate for you. This is more affordable when it comes to student loan consolidation because you will find a better interest rate.
- The program is beneficial because it reduces the overall debt burden and makes it manageable to monitor and repay the loan. With this type of loan consolidation, you should negotiate for a better interest rate from your lender.
- Consolidating typically refers to bundling of numerous loans and this allows you to repay monthly payments, therefore putting you on the road to financial recovery.
Why consolidate student loans?
The decision whether or not to consolidate your loans is a complicated one. Consolidation makes your loan repayment easier because you will be given a better interest and you should consider all the features before consolidating your loans. The benefits of consolidation include the following:
1. Single monthly payment
Consolidation is when you replace multiple repayments with a single loan or consolidation loan. It does not mean that you have to be in school for you to take out the loan. You can consolidate your student loans after you have graduated. A consolidation loan combines all your small high interest loans with a single loan that you can manage easily. The monthly single repayment simplifies the repayment process.
2. Alternative repayment plans
When you choose to consolidate your loans, you have access to alternative repayment plans, which include extended repayment period. Although the plans could be available in other unconsolidated plans, the balance of the loan and finding a solution to your long-term financial problems could help you overcome challenges that are associated with small loans. Alternative repayment plans reduce the size of your monthly repayment plans and increases the term of the loan. This makes the monthly payments more affordable and manageable.
3. Reduces interest rates on loans
When you have a student loan consolidation plan, you will have reduced interest rates. Small loans are often associated with high interest rates and managing them could be quite challenging. You must understand the terms and conditions of the consolidation loan before you commit to it. To maximize interest reduction, you have to choose a lender who understands your situation. You should not make loan consolidation a solution to your long-term financial problems.
4. Resets the clock on deferments
Consolidation resets the three-year clock on deferments. This is especially beneficial for medical students who do not get school deferments during residency or internship periods. If you need more time on your loan, then consolidating student loan can be a perfect solution for you.
5. Resets the loan term on an existing repayment plan
Once you have selected a consolidation plan, this will reset the existing loan repayment plan, giving you a chance to repay the loan within a stipulated period. Resetting the clock means that you could benefit from some features of the loan such as lower monthly payment without experiencing a higher interest rate.
6. You can switch lenders for better loan rates
Consolidating loans allows the borrower to switch lenders and this could be beneficial as every lender has his or her own interest rates on loans. Once you opt to consolidate loans, it means that you can look for a better interest rate. Consolidation of student loans reduces the total payment because the interest rate will be significantly reduced. Your financial history including income, credit score, educational background and job history will determine the new interest rate that you will be required to pay on your new loan. Compare loan interest from various lenders before you choose to take a loan from them.
If you are in a position to consolidate your loans, ensure that you read all the terms and conditions before signing anything. Our customer support team will help you throughout the process.