Is Student Loan Consolidation For You? Find the Facts You Need To Know Before Consolidating Your Debts
Student loan refinance has become a greatly necessary area for millions of students and it’s not hard to see why. Most students are forced to take out loans to see them through college and university and even if they end up with a scholarship, they still have to pay. It’s tough because you want to further your education but taking on those costs can be extremely difficult for most. However, what happens when you have a lot of loans and you’re struggling to repay? Consolidation may be your only option here but is this really suitable? Read on and find out a few things you may want to know before consolidating debts.
There Are No Excess Fees with Student Loan Consolidation
A lot of students think consolidation costs a fortune and they’ll be stuck with a mountain of upfront fees. In actual fact, no loan company asks for an upfront consolidation fee and you should never pay such fee. However, be warned, while there are no upfront fees associated with student loan consolidation, in the long-term, there might be more to pay. The reason why is simply because you’re getting a more affordable monthly payment and stretching this out over a longer period of time. This essentially entails interest and the interest can add up but that doesn’t mean to say consolidation isn’t a good idea. You just need to be aware of what happens in the long-term as well as the short-term.
You Can Only Consolidate Loans You Personally Apply For
Consolidation is actually a simple process but there are snags you must be aware of. For instance, while most borrowers are able to consolidate debts or loans they can only do so with their personal loans. Let’s say you took out two student loans and your parents took out another for you, that third loan cannot be consolidated. The reason why is simply because in the eyes of the lender, the borrower is your parents even though the money went to you. This loan is technically a separate loan in the lenders eye so it’s important to know when looking at student loan refinance options.
Is There A Limit As To What You Can Consolidate Or Are There Only Certain Lenders That Offer This?
In most cases, almost every lender will be more than happy to look into consolidation. Lenders want to recoup the money and know they stand a better chance when they offer to consolidate the loan. Student loan consolidation still entails you to repay but over a longer payment period and usually with one affordable monthly payment which means the lender is still getting their money. They will charge interest and you will repay and there are not real limitations over this as most lenders will be more than happy to offer such terms.
Should You Consolidate?
In all honesty consolidation comes down to personal choice and circumstances. If you are able to make the monthly repayments to each loan then for the time being, consolidation may not be necessary. However, having said that, consolidation can be useful to those who are in need of a more affordable loan repayment option. Student loan refinance also remains on your credit so that is something to be wary of.