Student loan consolidation is a sensible repayment mechanism that combines all your loans into one single repayment plan that has a fixed interest and is handled by a single lender. With this repayment plan, you will not encounter application fees, credit checks, or cosigners in order to take advantage of student loan consolidation.
There are a number of profits relative to consolidating your student loans and they include:
- lower monthly payments. Student loan consolidation offers a longer repayment term, and on that account lowers your monthly payment. It is said that you can reduce your monthly payments by up to 54 percent depending on your total balance. Your savings will actually help you with your other household expenses such as rent or mortgage payments, food expenses, car, utilities, and credit card payments. You can also choose to pay off your bills early by making larger payments if you feel comfortable doing so. You are free to do this since there are no penalties for early or extra repayment.
- get hold of a low fixed interest rate. At present, unconsolidated federal student loans unstable interest rate which changes each year every 1st of July based on the Treasury Bill. Consolidation offers a fixed interest rate that is determined by averaging the interest rate of all the loans being consolidated and rounding it up to the next one-eighth of one percent. To know your interest rate, you can visit loanconsolidation.ed.gov for an online calculator that will do all the calculation for you.
- modify a payment plan. Figure out where the best place to refinance all your loans is by asking around and checking local institutions as well as well-known firms in your area. Sit down and compare their interest rates and repayment guidelines. In this manner, you will be able to choose the perfect repayment plan that satisfies your current needs.
- only one payment per month. Bills and payments tend to come at different times each month. This is frustrating as you need to make a lot of payments in a month. By consolidating, you will be relieved of the hassle to keep track of all these bills and eradicate the need to make copious monthly payments to each of your lenders. Because all your loans have been combined, you would only need to write one check in each month.
- help your credit. Since you would no longer need to make so many payments in a month, you will never miss out on a particular bill. All your loans have been combined to a single loan and you would have to keep a watchful eye on only one payment plan. To make it brief, consolidation helps you have a better credit history.
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