Once you are out of your college with the degree, you have to manage all the bills and monthly installments of different loans you took for your studies. Managing different loans with different repayment installments, different interest rates and different terms gets tough.
The situation becomes worse when you don't have enough money to pay the installments. Debt consolidation in this situation can get you out of the mess. It makes the debt management easier for you. By consolidation you consolidate all your loans into one big loan. You take this loan from a new lender and then pay to different lenders. Now you pay just one monthly installment to the new lender. This makes the management of the debt easier.
Consolidation lowers the monthly installments by fixing them at particular amount that you pay monthly ant fixed rate of interest. There is no application fees, prepayment fees and penalties charged for consolidation loans.
Consolidation also reduces your monthly installments. If you take federal consolidation loan then the interest you pay is an average of all the interest rates under different loans. This weighted average is fixed for the entire loan term and never rises above 8.25%. This proves extremely beneficial if you are paying variable interest in different federal loans.
The fixed interest rate is not affected by the market fluctuation and thus lower the total amount you pay as monthly installments. The interest gets fixed after consolidation and this reduce your monthly installment by about 45%.
If you have a list of private student loans then consolidating it also reduce the monthly installments that you pay to different lenders. The interest rate on private consolidation loan is variable in nature. But there are some financial companies which offer such loans at fixed rate of interest. The financial companies charge one time fees for such loans. But there are lenders who waive off this fee completely. You can search the market and find such companies so that you end up with the best possible deal.
Consolidation also gives you the option to extend your repayment term. So, if you have a repayment term of say about ten years, you can extend it to a maximum of thirty years. This reduce you monthly installment amount and makes the payment of debt easier.
The companies offer you certain discounts and benefits if you make consecutive one time payment. The discount and benefits are given as a break in the interest for one time payment.
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