How To Make The Most On Your School Loans Consolidation
There are many school loans
consolidation programs out there. And practically all of them offer
more or less of the same thing - savings on interest rates and making
your debts more manageable. But just how do you make the most them?
First things up - it does pay to shop around for
the best interest rates from one lender to another. This does not
mean that you hop from one lender to another and take on consolidation
debts with each of them. Rather, it means that you get a quote from
at least three lenders and compare notes on their interest rates
and their payment terms.
Always, the lower the interest rates on your school
loans consolidation, the lower the amounts that you have to pay
on your school loans consolidation program. The interest rate on
a school loans consolidation is fixed. It can go lower, but never
If you pay on time, then you will benefit from
reduced interest rates. An example of this is when you agree with
your lender to an interest rate of 5%. You also agree that your
lender will reduce your interest rates by .25% if you pay on time,
without fail, for the next 24 months. The simple math is that after
24 months of judicious payments, your new interest rate will be
With a loans consolidation program, it is easier
to set up an automatic payment system from your bank account to
your lender's bank account. Automatic payment can also reduce your
interest rates from between 0.25% to 0.5%. With this kind of set-up,
your bank account is automatically deducted the monthly payment
on your loans consolidation.
In order to maximize the benefit of your loans
consolidation, try to pay off all your loans as early as possible.
Because the shorter time that you pay off your loans, the more you
will save on interest.
As a tip, do not be content with just paying the
monthly due, try paying more each month. Suppose if you have a student
loan amounting to $60,000 at an interest rate of 5.5% and if you
have the option of a ten-year term of a thirty-year term. If you
choose to pay off in ten years, you pay around $90,000, but if you
pay in thirty years, you will end up paying $120,000. We need not
tell you that $30,000 is a lot of money in savings.
Make your variable Stafford Loans a priority in
your debt payment. Try consolidating your Stafford loans within
six months after graduation. And just why should you do this? Your
interest rate rises 0.6% six months after graduation.
The benefits of school loans consolidation can
only be emphasized if you contrast it with what you have to pay
out if you do not subject your loans to consolidation. Aside from
bad credit ratings, students with unpaid loans have lesser chances
of acquiring a house or a brand new car (through a housing or car
loan) if they default on education loans.