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Why Student Loan Consolidation Rates Are So Significant Finance Articles | December 24, 2012 Alleviating student debt is all about cutting repayment sums, and this is easily accomplished through consolidation loans. But real savings can be made if student loan consolidation rates are kept to a minimum.
It is tempting to believe making significant savings on a loan is as easy as 1-2-3. But the truth is that even when seeking to consolidate loans, some careful attention has to be shown to the smaller details. Not least amongst them are the specific student loan consolidation rates that are charged.
It does not take a mathematical genius to work out that the smaller the interest rate charged the lower the required monthly repayments. And by extension, the smaller the repayments Preston Smith Color Rush Jersey , the more affordable the loan can be. Clearing college debts is a huge undertaking, so a consolidation program is the most practical option, but that is not to say that the first program available be picked.
Different lenders will offer loan consolidation programs with different terms and conditions, and ultimately with different rates of interest. Finding the lowest one can translate to making larger savings.
How Consolidation Works
Of course, understanding how a consolidation program works is the first step to securing the best possible deal. Simply put, consolidation means taking all of the existing loan balances together and repaying them in full Brandon Scherff Color Rush Jersey , replacing them with one single debt at one single interest rate. When it comes to student loans, consolidation rates can vary quite a lot.
This is where careful consideration needs to be made. For example, if there are 5 existing student loan balances ($1,500, $2,500 Montae Nicholson Color Rush Jersey , $3,000, $3,500, and $4,500) at 5 different interest rates (4% Samaje Perine Color Rush Jersey , 4.25%, 4.5%, 5% and 5.5%) the whole monthly repayments can be quite high. But buying out the total balance ($15,000) at just one rate of interest (4%) can lead to considerable savings.
Clearing college debts in this way is much more constructive, and if the repayment term is lengthened to 10 years instead of 5, for example Fabian Moreau Color Rush Jersey , then the repayments on the loan consolidation are kept even more affordable.
he same throughout the lifetime of the loan. This makes the repayments easy to budget for, with events in the markets having no effect on the interest being paid. Many students like clearing college debts through this method for this reason Ryan Anderson Color Rush Jersey , but the interest rate charged is slightly higher.
Variable rates can fluctuate with the markets, which is something of a double-edged sword. The starting rate is always quite low, but the monthly repayment due can increase sharply if interest rates increase, so it is harder to budget for. However, should rates drop, then the loan consolidation repayments become less.