Consolidation of student loans can sometimes be a tough choice for some students to make. Although it does decrease the amount of payments down to one each month, the student will have a longer time of paying of all of his loans through one consolidation company. Another added benefit is that it eliminates the need to remember several interest rates of different lenders and only focus on one, which could end up being lower than some loans if they are at variable interest rates.
So how does one find the best consolidation rate for their student loan? Here's some steps he can take to avoid getting crushed by high interest rates.
One of the best ways of obtaining the best rate possible for a graduate or undergraduate's student loan consolidation is to look for testimonials online. Not only will these be first-hand experiences of other customers of these consolidation lenders, but it will help the student find the best rate of the consolidation process. Students can be made aware of the professionalism and support provided by consolidators, and whether they provide services that are actually helpful during the consolidation process. Finding out another person's experience with a company is one of the best ways to figure out how well they run.
Consolidation companies advertise their best rates, but these could be different from what is actually offered to customers when their financial information is examined. There are also online reviews that focus on college and university loans that compare the best rates of a variety of consolidation companies and agencies.
Another method of finding some of the best student loan consolidation rates is through the use of online directories. These directories are designed to find local loan shops and brokerages which are specifically set up to help those undergraduates who are currently going through college or university, as well as graduates, in consolidating their loans and getting the most competitive interest rates for their student loans.
Online directories can take students directly to consolidators' websites so that they can compare the rates themselves and see which is the best fit for what the student needs.
SHORTER LOAN DURATIONS
Graduates and undergraduates should keep in mind the length of their repayment period on their consolidation loans. The longer it takes to repay the loan, the higher the interest rate will be, and this can cause the overall payments to be more than what the student would have paid for each of the loans themselves. By reducing the time period for repayment, the student will pay a much lower interest rate, and get the hassle of student loans out of the way much quicker.
HAVING A COSIGNER
Having a cosigner is also beneficial to obtaining a lower interest rate on consolidation loans, especially if the cosigner has a good credit rating. Cosigners usually end up being parents or even grandparents, and they should be wary that if the student goes into default, the consolidators will hold them primarily responsible for the balance remaining on the loan. This can leave cosigners with a financial burden they were not prepared for and can sometimes end up ruining their own credit score.
However, if research is done, students shop around for the best rates and keep up to date on making their payments, these problems can be avoided and ease parents' and grandparents' states of mind.
Debt consolidation is not for everyone, and should only be considered if a graduate or undergraduate is having problems balancing the payments for several student loans. Doing so can make it easier for students to handle all of their debts through one easy monthly payment, but only if he considers the best ways to get the lowest interest rates.
You might also want to read about “Private Student Loan“