Students, who cannot afford their monthly payments, can now make their debt repayments more manageable through student loan consolidation. Banks and several financial organizations are offering attractive packages to students who are willing to get their loans consolidated.
Mentioned below are some important points that need to be remembered while opting for a student loan consolidation.
1. Calculation of interest rates on student loans occurs in accordance with the 91-day Treasury Bill auction. Thus, determined interest rates are applicable from July 1 through June 30 of each year. It is always better to wait until July 1 to determine whether or not to consolidate the student loan as interest rates can increase or decrease.
2. Lenders often take more than a month time to approve a loan application. If the approval date goes beyond July 1, one needs to make monthly payments according to the restructured interest rates that might either increase or decrease. Hence, it is always important to plan properly before filing an application.
3. Consolidating a student loan as a married couple can be advantageous because one can obtain a higher amount as a loan. However, both the husband and wife are responsible for repayment of the loan, even if they get divorced in the future.
4. Student loan consolidation does not require the lender to make any credit checks. Interest rates are also not dependant on the credit record of the customer.
5. It is important to shop around and compare offers from different lenders so as to avail the best deal. One good way is to contact any reputed online lenders since online lenders quote a lower interest rate in comparison to brick and mortar lenders. Some lenders even offer certain attractive offers such as reducing the interest rate by 0.25 percent if the monthly payments are made electronically or a 0.5 percent reduction after a few years of continuous and timely payments. It is worthwhile to check such offers.
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