Important Facts Regarding Private Student Loan Consolidation

One of the best ways for students to finance their education is to consider the financial options they can get through student loans. If federal loans are not sufficient in covering the full cost of education, loans from private institution are available. If you find yourself in a tight spot with the many private student loans you have incurred, you might want to consider private student loan consolidation. Just like any government loan, consolidating means compounding all existing loans into one. There are many private institutions offering their services to students who are facing difficulties in paying their multiple student loans.

When you apply for consolidation of private student loans, the private institute will have to check on your credit history. Unlike government consolidation where there is no credit check, it takes 45-60 days for them to evaluate your application. You can apply through their website in the Internet or you can visit them personally.

Although there is no need for a co-maker, your application can easily be considered if you have someone who will apply with you; either a family member or friend who has a good credit standing. Once it is approved, all other existing loans will be paid off and you will only have a single loan to think of. You will be subjected to the terms and conditions of the private company that consolidated your loan.

Considerations should be taken into account in regards to interest rates, prepayment period and monthly payment. Interest rates are usually lower when you consolidate. Once you maintain a good standing in paying your account, private companies can lower down interest rate to as much as 1% thus, saving you money. You can also get.25% interest discount if you sign up for an automatic debit account payment.

Prepayment period is longer. Instead of the usual 15 years, it can be extended to 30 years. Longer prepayment period would also mean a smaller monthly payment. It can certainly give you the breathing space you need while you are still looking for a good paying job.

There is no pre-termination fee if you opt to pay your account early. This is a good option to consider so that you don't have to be saddled with an account unnecessarily for a long period of time.

In applying for a private student loan consolidation, you are not required to put in any form of collateral.