Private Loan Consolidation

Private loan consolidation is simply the process of bundling your private student loans into a single, much simpler loan.

It’s an unfortunate reality that many students can’t support themselves on the federal loans available. Perhaps their parents can’t contribute, or they have existing financial obligations such as child care, but for whatever reason they need to take out a private loan to supplement their federal support. As you can imagine, the average graduate with private as well as federal loans will probably have more difficulty balancing their budget to cover the payments. For this reason it can often be beneficial to the borrower to use private loan consolidation to help bring their debt under control in those early post-college years.

Continue Reading

Consolidating private loans works a little differently from federal loan consolidation. As the current loans won’t be subsidized by the government your current interest rates will tend to be higher than usual. Loan consolidation companies will therefore tend to charge a slightly higher rate than they can offer to a federal loan consolidation. You should bear in mind, though, that while it may be higher than usual it may actually be lower than your current rate.

An additional benefit is the fact that a consolidated loan will allow you to substantially reduce your monthly payments by increasing the term of the loan. Instead of making several large payments to your lenders you will be able to make one simple, affordable payment to your consolidation lender. Obviously, this will help you to better manage your budget.

You should be aware before applying for a private consolidation loan that your interest rate will usually be variable. While federal consolidation loand tend to be fixed, private loans are usually based on the Prime Rate published in the Wall Street Journal’s money rates section, with a margin of up to 4.75% added.

If you have good credit and a reasonable income this arrangement should suit you down to the ground, as borrowers with good credit are usually offered lower rates. To find out what rate you could qualify for you should speak to a specialist loan adviser. They will be able to advise you of your options and help ensure that you make the best choice in your private loan consolidation. Good luck!