Consolidate Your Student Loans With Low Interest Rates

It is wise to consolidate your student loans before it's too late! That's what I did. After attending three colleges and accepting federally funded student loans, I knew that I had to do something, quickly, before graduating. I researched the Internet one day for the lowest possible consolidation rate and found that I qualified for a very low rate and was able to extend my repayment period to 25 years. Yes, the lender allowed me to take a longer time to pay back the loan and at a low interest rate, which means my monthly repayment is low.

Don't Wait to consolidate! Most federal student loans are usually due for repayment only six months after graduating, and believe me, that is not long. If you don't take immediate action, you will be contacted by your lender before your first payment is due. And don't expect it to be a small amount if you have quite a few loans hanging over your head.

Many people end up defaulting on their student loans due to fear that they will never be able to make payments. Fear no more. What these people don't realize is that financial help is available by most banking institutions. They exist to help bring all the 'financial pieces' together - under one roof . This allows you to make only one payment instead of a few monthly payments to different lenders.

Just bringing your student loans to one lender may not be enough. Find a lending institution that will benefit your current needs. Look for the lowest consolidation rate possible. Yes, shop around. Before you buy a car, you want to make sure it is a car that suits your needs, is affordable, and will benefit you for many years. Consolidating your loans is no different.

Student loan repayment rates are now at a record low in 2009. This means that it is a great time to consolidate.

But here are some things to consider before you consolidate your student loans:

Your multiple loans will be grouped together into a single loan at a fixed rate.

If interest rates go up, yours won't. Hooray!

If interest rates go down, yours won't - this is definitely something to think about before consolidating.

Rigorous rules to play by - Some lenders allow discounts if you play by their strict rules. That is, a bank could offer you .25 - .50 discount off of your loan if you pay through ACH and are on time for 24 consecutive months. If you default or are late in paying them within that period, you will lose your discount. Ouch, that hurts.

Considering the length of time you have to pay back your consolidated student loans, you may not actually be saving at all as your loans would be extended over additional years and not the normal 10 year loan period.

Bank Rates on a Consolidation Loan - 3 Tips For Student Loans

Smart college students and grad students know how to any number of impressive things, like write a sonnet, understand complex physics equations, or speak Old Norse. However, no matter how wise they have become while receiving their higher education, many college graduates remain puzzled as to how to get a handle on their student loan payments.

Why Repayment Is So Challenging

Most individual student loan programs have repayment schedules of up to 10 years. This relatively short repayment schedule squeezes into a relatively short period of time payments for what can amount to tens or hundreds of thousands of dollars in loan debt. The result: very high - and sometimes unmanageable - monthly payments.

Students are particularly challenged in repaying their loans given the current state of the world economy. Jobs are more scarce than usual in many sectors - even for these well-educated grads. And, with living expenses showing no relief in sight, managing those regular loan payments is very challenging.

What can compound the problem is when students have multiple loans with different lenders. Holding multiple loans means having different payment due dates each month. It also means paying different interest rates on the various loans, while at the same time having different repayment schedules. This situation makes it hard to plan for one's financial future.

Defining A Consolidation Loan

A consolidation loan for students is a single loan that one uses to repay all existing, outstanding student loans. The new loan results in the borrower having to make only one payment each month - rather than 2, 3 or more as before. Also, consolidation loans allow for longer repayment periods of up to 30 years. This drives the total monthly payment amount down as compared to before consolidation.

Federal Versus Private Consolidation Loans

The rules and terms for federal consolidation loans and private consolidation loans are a bit different. Under the federal consolidation loan program, the new loan will always have a fixed rate. The loan will be contracted with a government-approved financial institution. The bank rate for a federal consolidation student loan is calculated as the weighted average of the person's existing loans, rounded up to the nearest 0.125% (with a cap of 8.25%).

Meanwhile, private student loans work a bit differently. These loans will be contracted via any number of private student loan consolidation firms competing in the market today. Unlike with the federal programs, the rate for these loans is calculated based upon the borrower's credit score. The final rate offered is a function of the person's credit score and the LIBOR or prime index (depending upon the lender).

Tips On Getting Good Bank Rates On A Consolidation Loan

If you are going for a private consolidation loan, here are some tips for getting yourself the best rate:

1. Contact Multiple Lenders: As with anything else in life or business, the more choices you have, the better your chances of finding the best-possible situation. Find at least 5 private student loan consolidation vendors online.

2. Compare Rates And Offers: Apply for loans from each of the lenders. You may be surprised to see that the various offers may vary significantly in their terms and rates. Good for you - this means more choices.

3. Select Best Overall Offer: Of course, you will want to select the best offer. Be sure to look not just at the interest rate, but at the other terms such as whether it is a variable or a fixed rate, as well as your repayment schedule options. You want the loan that keeps your payments as low as possible, while at the same time does not cost you too much in interest payments over the life of the loan.

Do your research on bank rates on a consolidation loan and you will be rewarded with a money-saving loan offer that can save you thousands over the life of the loan.