Debt Consolidation Loan - Invaluable Ally During Difficult Times?

The economic crisis has badly affected the confidence of the masses in the economy and their well being. Job security has become a big thing and people are adopting conservative approaches towards debt. If you want to protect yourself, then opt for debt consolidation. The primary motivation behind debt consolidation is improvement of the cash position.

If you want some extra cash in your hands, then debt consolidation is something you should consider very seriously. It will help bring down the interest rate charged on your debts - all your debts.

Amongst all your loans, your home loan will be the cheapest because the risk of the lender is mitigated by the mortgage of the house. Hence, the lender will not charge high interest on the loan.

At the opposite end of the spectrum is the credit card debt. It is unsecured and the lender has no protection if you default on repayment. Hence, banks and issuers charge high interest on this debt. You cannot avoid high interest payment on the unsecured debt.

All Your Loans Combined in One

Debt consolidation combines all your loans - secured as well as unsecured into a single loan. This will bring down the interest rate charged on your loan. Further, it will bring down your monthly payments and leave you with extra cash in your hands. Consolidate your debt and balance your budget without any difficulty.

Where is the catch?

The catch lies in the fact that your consolidated loan will stretch over a longer period of time as compared to other loans. Hence, your interest payments will be significantly higher. Short term loans are consolidated with long term loans and are repaid together. A personal loan will not extend beyond ten years.

On the other hand, a home loan may run for even 30 years. Your 10 year loan will be combined into your 25 year loan and you shall make repayment for the entire 25 year. You will be paying more on the 10 year loan. This cannot be avoided.

This feature of consolidated loans must be acknowledged and provided for. Hence, you should go in for debt consolidation only if you face the risk of losing your home or ending up in bankruptcy due to immediate cash flow problems.

A Better Option

Debt consolidation will help you tide over any crisis without any difficulty. Once things improve, you can proceed to make extra repayments to finish the debt quickly. Consolidation is much a much better option as compared to bankruptcy or foreclosure.

Alternative Student Loans - For When Funding Is Difficult

Such loans can fill a funding "gap." Often such a "gap" is created when a student is awarded a Stafford or Perkins loan, and then realizes that the amount in the loan does not fully cover all of the student's expenses.



The Lenders of Alternative Student Loans



Most lenders have put their loan applications online. Those applications are for secured loans. The lenders thus seek some "security" when providing a student with loan money.



Students can easily download an application for one of the many loans available. Once downloaded, the application can be filled out and sent to the prospective lender. One word of warning: Students should study the details of any loans before submitting any application.



The lenders of the private, alternative student loans hope to profit from their ability and their willingness to loan money to college students. As a result, they often attach stiff fees to the loan.



Those fees are sometimes paid at the time of the loan application. In other instances, lenders have added those fees to the interest rate for the student loan.



Comparing Different Alternative Student Loans

Students who want to compare the offering of the various lenders might feel like they are comparing "apples and oranges."



Students might wonder how a high fee and lower interest compares to a low fee and a higher interest rate. Students should remember this: a 3% fee is equal to a 1% rise in the interest rate. When keeping those facts in mind, students can better compare the various types of student loan.



Students might also consider how quickly they can obtain the loan. The Act private loans are fast, and they do no require the completion of a FAFSA. Still, students should take note of the fact that awarding of the Act private loans is based on the applicant's credit.



Different lenders have different repayment options. The student in need of a loan should study those options. An ideal lender is willing to defer payment until after the student has graduated.



Some lenders, such as Astrive, give student loan recipients an opportunity to refinance any of their loans.



The Best Time to Go After Alternative Student Loans

Unlike a lot of student financing, the money for the alternative student loans is sent directly to the student, not the institution that he or she is attending.



Students are not encouraged to look at an alternative student loan as a "first choice," when searching for a way to pay for a college education.



Not infrequently, a student with a Stafford Loan will "max out" on that loan while still in school. If he or she hopes to continue and finish his or her education, then that student needs to look at the alternative to the loan they first thought of.



The same student might also want to consider getting a PLUS loan.