While student loans may be considered to be "good debt", in that it can be looked at as an investment into your future, they still make for quite a large financial burden each month. For many college grads, the student loan payments may prove to be impossible to manage; that's when debt consolidation may benefit.
Rolling all of your academic debt into a single loan has its advantages and disadvantages. The good points include lower monthly payments and that it's much simpler to make a single payment each month than several. That being said, there are several downfalls if you should choose to consolidate, including much longer repayment terms and in most cases increased interest rates. It's very important to weigh the good and the bad in each case when you decide whether or not consolidating is the ideal solution for you.
After you do your due diligence and finally decide to consolidate, what's the next step in finding the best student loan consolidation? Well for starters, you can choose to consolidate with any lender. This is a big plus because it allows you the ability to shop around for the best interest rates. It's a smart idea to start out your search by looking online for advice from other former college students who have recently been through the consolidation process. See which financial institutions they went with and whether they're content with that particular lenders overall service and performance.
There are many lenders online to choose from, so beginning your search for one can get a bit overwhelming. Focus your time and effort on reputable financial institutions, such as federal lending programs (Direct Consolidation Loans) or nonprofit organizations which offer lending. Compare the interest rates amongst the various lenders to find the lowest possible interest rate. In addition, pay attention to any possible incentives and interest rate deductions and be sure to take those into consideration when picking a lender. Don't make the mistake of focusing solely at the amount of the monthly payment; look at interest rates, bonuses/incentives, monthly payment amount, and the loan repayment terms. Try to find a consolidation loan that has the shortest repayment terms possible that you can afford. For example, if you can afford a 15 year consolidation loan, pick that loan over a 30 year term that has a lower monthly payment. In this example, you would save a huge amount on interest charges over the life of the loan.
Once you have narrowed down your choices for a good consolidation lender, it is finally time to pick one lender to finance the loan. Whether it be an online debt consolidation company or a local bank you have chosen, you should be 100% sure that you understand all of the terms of the contract before signing the dotted line. This means that you must be sure you know when each payment will be due, whether or not you forfeit any applicable interest rate reductions for being late on a payment, late payment charges, repayment terms, early payoff penalties (if applicable) and other related information. Once you've covered all of this information and agree with all of the terms of the contract, you're now all set to sign the consolidation loan and begin the repayment process.
Joe Eitel is an accomplished freelance writer who is an expert in the student loan consolidation field. If you'd like to learn more about how to consolidate student loans or other student loan related topics, visit: Consolidating Student Loans
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