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LOAN CONSOLIDATION: DO’S AND DON’TS

Posted on May 27th, 2008 in Borrowers, Consolidation Services, Interest Rates by vrao

To consolidate loans you need to provide the lender with certain information about your financial history pertaining to your education, some personal information like your date of birth, address, phone number etc. information about two references and your current loan type, loan holder, rate of interest and amount of debt(s). If the lender finds that the information he needs is not complete then he will leave no chances to find it himself. The lender will want to know if the individual is reliable and does not pose a risk to him. You should also be assured of the lending agency you choose, ask your seniors, classmates and friends about the company they chose.

All the paperwork and documents pertaining to consolidation and also about the loans you had before consolidation should be kept safe for future reference. These records include the documents from the lenders that approved the funds in original, the ones consolidating the loans and also the statements from your school. The records must be accurate and should be maintained. You are ineligible to start the process of consolidation if you are still not done with your schooling and the loan is not in its repayment phase.

You should be aware of the fact that if the current interest you pay is lower than the interest you’ll be paying after consolidation then there isn’t any need for it. However consolidation may not prove the most ideal option in some cases. When loans are consolidated, the interest rate usually drops, but it stretches the term of repayment. This stretched time limit is often twice as long as the original, usually making the amount of total debt of the consolidated loan much higher than it would have been before consolidation. The decision to choose consolidation over multiple loans depends upon the terms both before and after consolidation.

LOAN CONSOLIDATION: STUDENT LOAN

Posted on May 21st, 2008 in Borrowers, Consolidation Services, Interest Rates, Lenders, Taxes by vrao

Students taking loans for educational expenses and fees face a lot of stress after completing their college/school due to multiple debts, they need to pay monthly bills, keep check of various schedules and amount to be paid for each debt they took. A student loan consolidation avoids these problems in a simplest way. All the school debts are streamlined into a single package that can be repaid with a single monthly bill and which is so neat and organized. A student loan has added benefits that include no penalty for prepayments.

A graduate is also financially assisted to make him understand financial terms and concepts regarding their student loan consolidation. The payback period can be as much as 30 years, which sounds more than enough to pay your consolidated debts. The rate of interest is for consolidated loans is the average of  the interests you pay currently or intended to pay in future if you are in your grace period. Discounts are also allowed on the interest rate if payments are done on time.

If a student misses paying a Stafford loan for nine months then he or she is considered to be in default, a late or missing payment brings along a hefty penalty; a loan consolidation avoid such situations. A student just after graduation may not be able to find a suitable job for him, it may be impossible for him to pay the agreed payments for the debts taken. If they are in default then by law, the department of education and loan agencies can charge 10% of their wages.

Loan agencies can also provide help in these cases by getting a suspension of payments for a period of time till the student is in much better position to pay off his debts. In rare cases, these companies arrange for debt forgiveness, hence making the student free of his debts and obligations permanently.

LOAN CONSOLIDATION: AN INTRODUCTION

Posted on May 16th, 2008 in Borrowers, Consolidation Services by vrao

Loans are a great source of financial aid to people, especially students who get to pay their educational fee and expenses through loans. But when there are multiple and hefty loans to pay soon after they leave the college then things go burdensome. Consolidating loans can be a great solution to this problem. Loan consolidation works on a principle that lumps up all your loans into a manageable payment mode and also extends the repayment time up to 30 years.

Consolidation occurs when a single lender pays off all your scattered debts and then makes the total balance a consolidation loan with a fixed interest rate and a monthly payment. This will in turn make your total balance higher and hence will increase the time limit for repayment, reducing your monthly payments. The result is you will have just one loan to pay on. Loan consolidation usually provides lower interest rate saving you lots of money; it also reduces the monthly payment as the time limit increases. It also reduces the stress you face in attending different loans, making it into one monthly bill. Loan consolidation process is rather simple; it doesn’t even require any credit checks or co-signer.

There are no charges or any kind of fee. One thing you should keep in mind before consolidating your loans is you should make sure that the interest after consolidating the loans should not increase above your current one. If you are close to pay off your loans then there isn’t any worth going for loan consolidation.

To decide upon consolidation there are few pre requisites such as one should have more than a fixed amount in federal loans to reap the benefits of consolidation. This fixed amount is usually $10,000. Moreover all the loans you wish to consolidate must be under your social security number. You must be in your six months grace period or should have started paying your debts before applying for consolidation. You should have more than one lender.