How To Consolidate Private Student Loans
If you want to lower your monthly payment or possibly lower your interest rate on student loans, then you need to know how to consolidate private student loans. Student loan consolidation is generally only applied to private student loans, because the low interest nature of the federal student loans. There are many benefits to consolidating private student loans, such as obtaining one single payment and lower monthly payment. Of course all of that is at the expense of longer loan repayment period and more interest accumulated over the years. In this article, we will show you several methods which you can consolidate private student loans.
- Shop around for the lowest interest rate. There are plenty of companies that would happily to provide services that consolidate private student loans, such as the Wells Fargo Student Loan Consolidation. You can get an estimate of the interest rate and monthly payment by applying to them.
- Use third party resources. Personal finance websites can put everything you need to know in one place, thus ease your shopping experience. You can shop for rates of private student loans consolidation from many companies. Furthermore, you can also use their loan calculator to estimate your monthly payment and total interest paid to help you pick the right private student loan consolidation program.
- Understand the risk. Private student loans consolidation has almost always adjusted variable interest. Depending on the program, some are variable interest are adjusted to one month LIBOR (London interbank offer rate), and some are adjusted to three months of LIBOR. All of these mean that your interest rate and monthly payment can go up and down depending on the London interbank offer rate.
- Consider other alternatives. If you own a house and have equity on that house, then you can consider taking out a home equity loan to consolidate private student loans. While the interest are almost the same between the two loans, but private equity loan always has a fix rate interest, which means you can have a secure monthly payment year over year without the worry of possible increase in interest rate and monthly payment.