How long does it take for a loan consolidation to be processed?
That depends on your lender, as well as the amount and types of loans you currently have. You can plan on the process taking as much as six to eight weeks, unless you chose a lender who guarantees fast processing. Your first payment will then be due within 45 days after the consolidation is finished.
The consolidation process generally takes 60-90 days. Using an online Web application or an online lender, can significantly reduce the amount of time it takes to consolidate a borrower's loan.
What are the main benefits of loan consolidation?
One of the biggest strengths of consolidation is the ability to make one payment to a single lender. The second is you can lower your payments significantly by stretching out your repayment period. And finally, interest rates are a serious consideration to consolidating your student loan debt. Check out as many lenders as you can, each offer different rates and benefits. For some lenders, there are no fees, credit checks, or prepayment penalties. And the fixed interest rate is set by federal law, with a lifetime cap of 8.25 percent.
What are the main drawbacks to consolidating student loans?
Increasing the total lifetime of the loan will result in substantially more interest charges over time. You may lose cancellation, forgiveness, deferment, forbearance, grace-period, and other privileges on the federal loans. Once you consolidate your loans, your decision is permanent. You can’t undo a loan consolidation. You can, however, re-consolidate a consolidated loan, so long as you are including a new loan to the consolidation.
What happens when I consolidate my loans during the grace period?
Some grads choose to consolidate their loans during their grace period in order to receive the grace rate on their loans, which can be typically 60% below the rate you’ll pay once your actual loan repayments begin. In consolidating during the grace period, you automatically waive the remainder of your grace period and your loan payments are immediately due. Yet, you might be able to get the lowest consolidation rate by maximizing your grace period.
How can I get the best deal on a consolidated loan?
There are a host of great consolidation companies available with many different options for borrowers. Whether you go with a startup company like SoFi, or a more traditional route with DRB, you will be presented with the list of all the information you will need to make an informative decision. The best way to go about this is to research the consolidation companies, study comparisons to each other, ask a lot of questions, and finally try applying for those which seem to fit your unique financial picture.
If your credit is shaky, you still have a viable opportunity for a loan consolidation through the FFEL program. The FFEL consolidation loans require no credit check, even for PLUS borrowers, who are typically parents of students in college. With direct loan consolidation, however, PLUS borrowers will be subjected to a credit check to make sure they don’t have a negative credit history.
Consolidating your loans may appear overwhelming and tedious, but consider the alternative. Look into your financial future and honestly answer whether or not you will be able to stay financially healthy to pay your multiple loans. The hard work is now, getting all those multiple loans down to one simple payment with a great interest rate. This will save the headache and worry of your future self.