Student loan debt can create an uncomfortable financial situation when you have to start repaying on the loans. The payments can put anyone in a bind. To make matters worse, it may take several years beyond graduation to start making decent money. This is where consolidation student loans can be beneficial. You can take a new loan to pay off the existing ones, and create a smaller monthly payment. In many cases this can make the difference between living comfortably and staying awake at night worrying about debt.
Preparing for Consolidation
You'll be in a much better position if you take a little bit of time to prepare for consolidation first. If you are still in school you can start looking at what you'll need later. If you can recognize a potential problem with paying back the loans before you have to start repaying you'll be much better off. Even if you are already in a financial bind, you can do a little legwork up front. Make sure your current loans, not just the student loan, are up to date. Missing payments can knock you out of qualifying, even if it was just one time. Late payments or over limit credit accounts on your credit report can reflect poorly and decrease your score. The credit score is heavily relied on, even with consolidation of student loans. To avoid getting a higher interest rate, try to keep up on all of your accounts for at least a year before consolidation. Checking your credit report can also help you with this. It's not uncommon for items to be reported incorrectly. You can dispute any items that have been reported incorrectly.
Comparisons
Shopping for student loan consolidation is just as important as shopping for loans for anything else. Many lenders offer different terms and perks. You may also save money on interest rates by shopping around. When you start looking for consolidation programs there are several things you want to find out about. Most people assume the interest rates are the most important thing to look for. While the rate should play a large role in your decision, you want to find out about other terms and benefits as well. Some programs will allow you to defer a certain number of payments during the term. This means if you have a bad month where unexpected expenses have left you short, you can push that month's payment back to the end of the loan. It won't report on your credit as a missed payment, and you can pay your other bills without worry. Some companies also offer flexible terms, ranging from 10-30 years. A 10 year term will have a higher monthly payment, but lower interest over the life of the loan. A 30 year term will allow you to make payments within your monthly budget but will create more in interest charges. Weigh this when you start comparing.
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