By – John Lewis
Those who have private several student loans might have heard about the process of consolidating these loans. Consolidation is when you take new loan in order that you are able to pay out those existing ones. If you will be able to secure this consolidation loan, you will only be worried about paying one loan only instead of the several. But one must not jump into this financial strategy unless he or she is aware of the benefit and the disadvantages that come with it.
Qualifiers to Get the Loan
In order for you to qualify for this kind of instant loans, you must be able to meet certain requirements. For one, you must not be currently enrolled or if enrolled must for a part time status only. You must also be currently repaying your private loan or still within the grace period of the loan. Your present loans must be at least $5000 to $ 7500 and you have an excellent repayment history without any defaults. The private loans may not be consolidated along with your federal student loans. You may also consolidate it in your name only. This means that the loan taken by your parents or your spouse for your education cannot be consolidated by those you have taken on your own.
Advantages of Private Student Loan Consolidation
There are numerous advantages in taking consolidation loans. Since you will only have one loan, there is only one due date for repayment to remember and only one check for you to issue. If you have several private student loans, you need to remember the different due dates for each loan. Those having difficulty in repaying several student loans or those anticipating any change in expenses or income may also take advantage of these instant loans. With it, the period of repayment can be lengthened. This means that the monthly repayment will also be lowered.
For those who have more than one private student loan, but were able to make repayment on time will certainly improve their credit scores. This can make them qualified for consolidation loan at lower rates of interest. The different private loans with variable interest once consolidated will only have one fixed interest.
Disadvantages of Private Student Loan Consolidation
Depending on the kind of instant loans you intend to take, there may be some downsides that come with loan consolidation. For one, the lengthened period of repayment may mean that you have to pay higher rate of interest. Extending the period will also mean that you need to pay for the loan longer and there is always a possibility of incurring pre-payment penalties.
Caution on fraudulent lenders
If you decide to consolidate your private student loans, you must be very careful in choosing a lender. You have to be aware that there are several unscrupulous lenders of this kind of instant loans. Those offering significantly lower rates of interest must be dealt with utmost caution. Those charging upfront fee must also be look at with skepticism since these charges should already be deducted from the loan amount.
John Lewis is Australian non-fiction author and financial lead at Simplepersonalloans.com.au. Simple personal loans is a specialized professional lending company, provide fast personal loans and online personal loans. We have also turned what always was a complex ordeal, into a much simpler and easier process and help people who are busy & prefer for online process.