Tuesday, March 29, 2011

Using A Student Loan Calculator to Find the Best Consolidation Programs

If you want to compare student loan consolidation offers and rates, a student loan calculator will allow you do this with an actual number. A lot of companies will toss out terms and rates, but in the end if you don't know what kind of payment you are looking at, it's not going to do you much good. If you want to use a calculator you will need to have several pieces of information.

Understand Your Current Loan
A consolidation loan is going to pay off the current loans you have and create a new loan. For each of the loans you have you want to write down what the interest rate is, what the terms are (how many years), the type of loan, and the amount you've already paid towards the loan. Many websites offer calculators that can help you see your savings before you sign up. Before you can use these options you need to have the listed information above to get the most accurate results. You should also take a look at your credit so you know what kind of interest rates to expect. You can find online calculators that will help you determine average rates for your credit score. You may have to pay a few dollars to get your actual score, but it's helpful when you are shopping for the best consolidation rates. Just be sure you aren't signing up for any kind of monthly recurring charge or service when you get the score. If you go directly through the credit bureaus you shouldn't have to worry about this.

Using the Calculator
You can find several student loan calculator options if you do a simple search. Try to find a consolidation calculator. This specific type of calculator will take in to account the average available rates for consolidation, and will tell you not only how much you will save each month, but how much interest you end up paying over the life of the loan. For instance, a $50,000 Stafford loan at the standard rate of 6.8% over 10 years would cost $575.40 per month. You end up paying almost $20,000 over the life of the loan just in interest. A consolidation that changes the terms to 25 years will lower your monthly payment to around $370 per month, but will end up costing you more than $60,000 in interest over the 25 year term. And that's assuming you have decent credit and can get the standard interest rate. Keep the calculator open while you shop around. This will give you a much better idea of what is a good deal and what isn't. The calculator will allow you to change the interest rates and terms, so as you speak with different consolidation companies you can plug the numbers in to see what savings you can expect. This is one of the easiest ways to compare student loan consolidation offers.


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