Debt consolidation is a process of using one single mode of payment to repay multiple smaller loans that you have. It allows you to make one single payment, rather than to pay smaller ones. Are you aware that if the interest rate on the previous loan is high than the new one, it will save you money on your monthly payments? If it is used wisely, it can be a lifeline but if you misused it can give you sleepless nights. Read on to find out benefits of student loan consolidation.
It streamlines bill payment process
With numerous student loans, I bet that you will probably have to remember and make payment on multiple dates for the monthly payment. But with one loan, you will only make one payment on the due date and write one check. Is that just convenient?
It lowers the interest rate
If it happens that you have a single or numerous student private loans and you have improved your personal credit scores since getting your loan, then you will be qualified to get a consolidated loan with very lower interest rates.
It extends your repayment plans and terms
Are you having problems in repaying your student loans or do you anticipate having a change in your expense or income? Then you may consider consolidating so that your repayment dates are lengthened to give you enough time to make full payment with a lot of ease. Although, extending the life of the loan, comes at a price because you will have to pay interest on the new loan for an extended time but it is not bad.
It allows you to switch from a variable loan to a fixed rate loan
If you have numerous private student loans with different variable rates interests, you will be able to consolidate your loans and get a single new loan at a fixed rate.
It allows you to get into an alternative payment plan
Your state of affair may have changed the moment you received your first student loan. For instance, the 10 years standard payment plans that are given to most federal loans may not suit your financial situation. On the other hand, consolidation offers you numerous ways to make repayment.
It gives you borrower benefits
Are you aware that lenders always offer loan holders some benefits for solely being a good borrower? Does your lender give you benefits? If not, then you should consider consolidating your student loans with lenders who offers benefits. The benefits may include a discount on your interest rate for any automatic payment made from your personal bank account.
The information above gives you some of the important benefits of taking up student loan consolidation. Student loan consolidation will not only give you ample time to clear your payment but also improve your credit scores.