Practical Guide on How to Find the Best Student Loan Consolidation Rates
Several students decide to consolidate loans with a single lender, so they can make the repayment easier. However, it is important to choose the best rate and repayment scheduled offered by different lenders. The following are some practical and time-saving tips that you can apply as you search for the ideal consolidation lender.
1. Check the repayment penalty offered by loan consolidation companies.
Initially, you may visit the Department of Education website and check the different blacklisted companies that charge massive amounts as a penalty for early repayment. Then, obtain a list of reliable and reputable companies, and visit their websites for more information on the terms and policies.
Your goal is to find the best consolidation loan company that does not enforce early repayment penalty. You will also discover several lenders that offer the cheapest interest rates. However, they may charge large fees and penalties. With this in mind, make sure you determine the repayment schedule and consider the guidelines before making a decision.
2. Keep in mind that variable rates may be better than fixed fees.
Search for loan consolidation companies that provide a clear description on their variable and fixed interest rates. The Department of Education has listed statistics on the national averages of variable and fixed interest rates for the year. While lenders may offer fixed fee rates that are usually more expensive in the end, some companies provide variable rates that have greater benefits in the future. For instance, low limits on variable rates may be reasonable enough to help you save more money eventually, while the highest end of a fixed rate may be rather costly upfront.
3. Consider the rewards provided by lenders.
It may be helpful to choose companies that offer incentives to clients who make their payments promptly. These rewards can build up, and you may save more money in the future. There are companies that offer special deals, yet you should not compromise high interest rates for these benefits. The lender should provide you with greater benefits, so consider this factor instead of making massive profits.
4. Identify the reputation of the company.
Do not opt for companies that usually contact you first, unless they are verifiable and reputable. The Better Business Bureau has provided a list of companies with a notable reputation, so make sure you check these lenders instead of relying on unreliable lenders. You may also consult your college’s financial aid department for recommendations on the best consolidating companies. You should remember that in order to get the cheapest rates, you should check several companies and compare the fees they charge.
Additional Tips You Need to Know
If you are thinking about consolidating your loans, you might want to contact your lenders and determine the interest rate you are paying currently on your loans. By consolidating your student loans, you can have an opportunity to change the rates from variable to fixed rate. However, keep in mind that the rate may vary, yet it should not reach over 8.25 percent. A lending company fixes the rate after determining the weighted average of your loan when you consolidate. Then, this average is usually rounded up to 1/8 of a percent.
In addition, you should review the repayment plan schedules that lenders provide. You need to calculate the monthly loan repayment that you should make when you consolidate. This step will help you assess whether loan consolidation can reduce your monthly payments. It is also essential that you search for repayment options that are suitable to your current financial situation.
You should also find a way to minimize your payments by obtaining the best rates possible. If you have the financial ability, you may consider asking for the shortest duration for the repayment period, so you may qualify for lower rates on your loan.
Loan consolidation allows you to combine all your student loans, so you can qualify for cheaper interest rates or extension on the repayment plan. Getting the right student loan consolidation rates may take some research. You can find the different terms, policies and rates charged by different companies by checking their website. With these tips, you can increase your chances of finding the ideal lender that can help you meet your needs and budget.