Why is it Important to Consolidate Your Student Loan While Studying

Posted by on Mar 3, 2016 in Payday Loans | Comments Off on Why is it Important to Consolidate Your Student Loan While Studying

Just like you get a fresh start on life by making some personal decisions, loan consolidation works the same way. It is like refinancing. You get a fresh start on loans. Actually, you get a new loan to pay off all your old loans. And you have to repay the new consolidated loan.

Consolidation makes sense if you want to roll all your loans into one and repay them by making just one monthly payment. It is also a way out if you don’t want to default or if you want to lock fixed interest rates over variable ones.

Important Reasons to Consolidate Student Loans

There are multiple benefits of consolidating your student loans.

Streamlined Bill Repayment

Payday Loan LenderWhen you have more than one student loan, it will be a hassle to remember numerous due dates and you might end up making late payments. With one consolidated loan, you only have to make one monthly payment and have one check to write.

Extending Repayment Term

If your financial condition is taking a turn for the worse or you feel you might not be able to meet the repayment due dates, you should consider consolidating to lengthen the duration of repayments. This will allow you a longer repayment term. But be warned. Since you signed up for a long -term plan, you will have to pay interest for that period as well.

Low Interest Rate

With multiple loans, interest rates compound as well. If you have a good credit score since you obtained the loans, then you could qualify for a consolidated loan at lower interest rates.

Switching between different Interest Rate Types

If you have variable interest rates on multiple loans, then it will make sense if you consolidate your loans into a one large easy to manage loan over a fixed interest rate.

Lower Monthly Payments

When you are a student, you are not earning enough to cover up your personal expenses along with paying large monthly loan payments. If you consolidate your student loans, you get a longer repayment term. This means that you get to make lower monthly repayments over a long period of time.

Alternate Repayment Plans

calculator-ttsYour financial circumstances may have taken a sour turn since you first applied for the student loan. Maybe the 10-year plan does not fit well with your life circumstances. Consolidation offers different repayment plans that you can choose from depending on your current financial status.

  • Extended Repayment: It stretches your loan repayment duration from 10 or 12 years to 30 years. The extension depends on your loan balance of course.
  • Graduated Repayment: It starts your repayments from a low amount and then increases this amount gradually every two years.
  • Income-contingent Repayment Plan: It fixes your monthly repayment according to your income and then this amount changes with time as your income changes.

Income-sensitive Repayment Plan: It calculates your due monthly repayment as a percentage of your pretax monthly income. You can also check payday loans by Quiddi Compare for other options.