How to Consolidate Private Student Loans – An Insider Guide

Paying for a college education is a big expense, so it is not surprising that students leave school deeply in debt. If you took out a private student loan, the interest starts immediately and accrues while you are still in school. The interest amount gets added to the loan principal upon graduation. In general, you have six months from the time of graduation before you must start paying off the loan. This will give you time to find work and seek ways to refinance or consolidate your private student loans.

Federal loans have a cap on interest rates for consolidation loans. On the other hand, when you try to consolidate private student loans you will have to deal with current loan rates. This can be a bad thing if current loan rates are higher that when you originally took out your loans.

However, you may also be able to benefit from loan consolidation. Many lending institutions offer consolidation programs that extend the term of the loan, even if the interest rate may be higher. Stretching out a consolidation up to 20 years can help lower your monthly repayment amount.

If the amount of your debt is not too large, it may be easier for you to consolidate private loans. One way is to obtain a secured private loan. You will have to offer personal property fully owned by you as collateral. A secured personal loan goes a long way in lowering the rate. You may also qualify for an unsecured personal loan that requires no collateral. At any rate, explore all available options before making a commitment.

To consolidate private student loans, you must have a complete and accurate list of the lending institutions that provided the original funding including amounts and terms. Consolidating your multiple loans with other lenders will help simplify your financial obligations and allow you to negotiate for a more affordable monthly repayment scheme. If you can find a consolidation that offers a lower rate, you will be able to lower the interest payment and save money.

Try to find a consolidation loan that can give you a better deal than your individual loans. Review all your options and make sure that it makes better sense to consolidate your private student loans. If interest rates when you graduated are higher than when you got your loans, consolidation may cost you more money than to keep your individual loans as they are.


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