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How To Make The Most On Your School Loans Consolidation

Jan 27, 2008
Description: School loans consolidation programs offer everything that debt consolidation programs are supposed to offer. But there are ways to even save more in interest on your school consolidation loans.

There are many school loans consolidation programs out there. And practically all of them offer more or less of the same thing - savings on interest rates and making your debts more manageable. But just how do you make the most them?

The first step, and it is an important one, is to realize that it really does pay to shop around. By looking at a number of lenders and getting multiple quotes, you will find out where to get both the best interest and the best repayment rate and terms in one loan. Compare the quotes from a number of lenders, three or more, before you decide which company you feel can offer you the best loan.

Of course, as with any loan, the lower the interest rate, the less you will pay in total. The interest rate on school consolidation loans is a fixed rate, meaning that while your rate can go down at any time, it can never go above a low fixed point.

By paying on time, you are given the added benefit of reduced interest rates. If you take out a loan with a 6% interest rate, but your loan agreement states that you will get a 1.25% interest rate decrease after 24 months of consecutive on time payments, then in just two years, the interest rate on your loan is only 4.75%. These numbers will vary according to your individual loan, of course.

With school loan consolidation programs, you can set the loan up so that payments are automatically debited from your bank account. Paying automatically can reduce your interest up to .5%. With automatic payments, as long as you have money in the bank, neither you nor the lender ever have to worry about a missed payment or lost check.

In order to get the maximum benefit from your loan consolidation, it is wise to try to pay off the loan as early as possible. The shorter time frame you pay off your loan in, the less you end up paying in interest.

It always make sense to try and pay more off each month than the monthly dues. With a $60,000 loan at a 5.5% interest rate, the total difference in interest in a ten and thirty year loan is $30,000. This shows you just how much can be saved by paying early. So think carefully before making up your mind on such matters as length of loans and loan repayments.

Make your variable Stafford Loans a priority in your debt payment. Try consolidating your Stafford loans within six months after graduation. And just why should you do this? Your interest rate rises 0.6% six months after graduation.

The best way to show the benefits of student loan consolidation is to compare your payout to what you would pay if you chose not to consolidate the loans. Some simple math will show you a great deal of savings. In addition, if you default on your school loans, you will have a much smaller chance of being able to purchase a home or car due to the damage missing loan payments will do to your credit report.
About the Author
Looking for information on debt consolidation loans , credit card consolidation or any kind of loan consolidation? Consolidation Loans Advice is a goldmine for information on all aspects of loan consolidation. Get the facts.
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