Student loan consolidation.
Monday, September 25th, 2006
Student loans typically have a lower interest rate than others - credit cards for instance, or other private loans. But there are ways to further reduce the damage - through loan consolidation.
Why should you do this? If you have multiple loans with different interest rates and payment periods, you’re likely to be making payments more frequently and with a higher interest cost. Consolidation allows you to lock in a favorable rate of interest, as well as stretch out the tenure of the loan. This could translate to lower monthly payments.
Watch out, though. It’s tempting to consolidate these into 15 or 20 year loans because the monthly payments drop significantly. On the flip side, you could get locked into a higher rate (for the longer term loan) - and you’re committing to keep up the payments over the entire period.
In general, loan consolidation does pay off - but make sure you shop around for the best rates, like this.
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