Should you really Try Consolidating Private Student Loans
Consolidating private student loans is like putting all your Hershey’s chocolate bar in a blender, where you’ll get a concoction of pure chocolate temptation. Imagine adding tomatoes into it. It just wouldn’t be right. In real life, your tomatoes are your federal loans, they won’t mix with your private student loans when it comes to combining them as one. When you consolidate private student loans, you will make your loan more manageable. Instead of having lots of loans to deal with each month, you’ll only have the convenience of facing one.
When you are already bogged down with too much private student loans and you’ve already exhausted your deferment or forbearance options, there’s only one road to take and that is consolidating private student loans. Now, that’s really practical! You will truly need to check in with your finances to see if you’re a possible candidate to loan consolidation island. Get your boat ready as you journey into the world of the unknown, where you will need to watch for your total monthly payments, interest rates, lenders, repayment terms, and credit history.
Should You Try Consolidating Private Student Loans?
You will have to trust your good judgment in reviewing the pros and cons of getting a loan consolidation. It is good to weigh the consequences of your choice by knowing:
The PROS
1. You will have lower monthly payments, where rates are reduced by extending the term of your loan.
2. If you have a good credit, you can ask for a lower interest rate.
3. You will have an easier time tracking your loan and payments.
4. You have the freedom to choose any lender for your loan consolidation.
5. You are free from fees, credit checks, and prepayment penalties when you consolidate your loans.
6. You are free to choose which loans you want to consolidate.
7. You can consolidate your loans during the waiting time before you are obliged to pay.
8. You can enjoy a fixed interest rate if your loan has a cap of 8.25%.
9. If you’re under deferment, the government will pay for your loan’s interest on the subsidized part of your loan. Take note that a 48-month deferment applies to medical or dental residents, and a 36-month deferment applies to those who are actively serving the military.
10. If ever your student loans default, you can consolidate these and manage your payments better.
The CONS
1. You can’t undo a consolidation. Once you’re in, there’s no way of getting out.
2. You may lose benefits on certain loans like those money-saver deals and lower interest rate offers.
3. You may be required a minimum loan amount for you to be considered for a loan consolidation.
4. You cannot enter your private student loans into a federal loan consolidation.
5. You will definitely lose your grace period once your loan consolidation is granted during that time.
6. You can be locked with a higher interest rate in the future, specially when the rate is computed on a weighted average.
7. You may lose your privilege to loan forgiveness, deferment, or forbearance.
8. The overall interest rate you will be paying for increases with your loan’s term. The longer, the costlier.
9. Loan consolidation cannot erase a bad credit report and a low FICO score, specially when you have loan defaults.
10. You may get a tight repayment term and it may be hard to release your cosigner from the deal.
You have to be very careful when making that research on the best lenders in town who can give you your money’s worth. Watch out for scams! You have to ask your lender about the terms of consolidating private student loans, fees, interest rate, and flexible repayment options. You can also contact any of your lenders right now and ask if they can consolidate the loans for you. This will help you save precious time. Compare, Select, and Reject!
READINGS:
http://www.finaid.org/loans/privateconsolidation.phtml
http://www.studentloanconsolidator.com/private/
http://www.ehow.com/how_2331076_consolidate-private-student-loans.html
http://www.collegescholarships.org/consolidation/private-student-loan-consolidation.htm
http://www.nslp.org/pages/pdf/prosandconsenglish.pdf
