To consolidate student loans from private lenders, individuals need to turn to other private lenders. It is an ideal way to condense numerous student loans into one, easy to make monthly payment. In many instances, you can consolidate these loans to a lower monthly payment. You can also consider the options to consolidate federal student loans. In both instances, the savings are significant.
For those with private student loans, take these steps to find the right lenders. Look for a variety of lenders. In particular, compare the financing options each offers, including how much of a savings one lender can offer over the next. Look for those lenders that offer interest rate deduction plans. This is the best way to save money overall.
In addition, some companies offer rate reductions for on time and automatic payments. If you opt to have automatic payments made to the lenders, you may get a lower interest rate on your loan. Choose a loan without prepayment penalties. This is key. You do not want to be limited to paying your loan off over a period of time.
Each private loan has its own interest rate. With that in mind, compare several lenders offering these loans. Some lenders may offer a lower or higher interest rate than others. Fees and terms may also range from one lender to the next. Compare several private loans before investing in one lender.
It is common for individuals to turn to consolidation of federal student loans after a period of time especially if they have numerous loans. Most types of federal loans can be consolidated. This includes Stafford, PLUS and SLS loans, as well as Perkins, FISL, NSL, HEAL and Health Professional Student loans. Other types of loans may also qualify.
The interest rate you will pay is the weighted average of the interest rates on the loans you are combining. It is then rounded to the nearest 1/8th of a percent. The highest you can pay currently is 8.25 percent. There is no cost to consolidate these loans. In fact, if a lender requests a fee in advance for this type of loan look for another lender. There should never be an upfront fee for these loans.
If you are married, you may no longer consolidate loans together. Parents who hold these loans for their children can consolidate, as can students. Students can only consolidate during the grace period or once the loan enters repayment. Federal loans cannot be consolidated while the student is in school.
While it is possible to consolidate federal student loans and private student loans together, this is not always a good thing. You may lose the tax benefits of federal loans if you consolidate. Plus, federal loans can sometimes be deferred for a limited time, whereas private student loans cannot. Make these decisions carefully to ensure you achieve your financial goals.