The term, consolidate student loans specifically means to use one larger loan to repay several smaller loans. This allows the student loan holder to have just one monthly payment to make. However, it is also possible to use student loan consolidation as a way of getting a lower interest rate on the loans you currently have.
Consolidate Student Loans – What to Expect with
Student loan consolidation allows you to enter into a new loan, with new terms and new interest rates. In general, the best situation is for you to have a significantly lower interest rate on the new loan than you had in the old loan. This will save you money monthly and in the long term. However, many people consolidate student loans simply to get a lower monthly payment. Most of these loans will have a longer repayment term (the number of years you need to repay the loan for) than the original loan.
Once you find a lender to consolidate student loans with, that lender will use their funds to repay each of your current lenders. The original lenders no longer owe money from you. You now need to repay the new lender according to the new terms of the loan.
You are still obligated to repay your loan. Even if you consolidate from private lenders, you must repay these loans. Even bankruptcy will not forgive these loans. If you fail to repay this lender or the original lender, your wages could be garnished and assets seized by the courts, depending on the circumstances.
Is Consolidation The Right Option For You?
If you have the ability to repay your loans as they stand, and you do not mind paying more than one lender each month, if this is the case, then consolidation may not be the right choice. It is important to keep in mind that the overall cost of consolidation can be higher in the longer term than simply repaying the loan as it stands. However, if you can obtain a lower interest rate, you may save overall.
Where Do I Find A Lender?
Varieties of lenders offer student loan consolidation options. It is important to note, though, that each lender may offer a different loan for you. Some may offer lower interest while others may offer lower monthly payments. Compare the options you have to determine which the most affordable choice for your needs is.
You can use a debt calculator to help you to see the differences in loans. In addition, this is a good way to consider various term options. Some lenders may be more flexible in extending the repayment period than others are.
Before You Consolidate
Before considering student loan consolidation, it is critical to determine if you need a lower monthly payment or if a lower interest rate is available to you. If either of these situations is true, spend some time considering several lenders and their offer. You may need to meet credit qualifications by some lenders to qualify for this process.