What is a consolidation loan?
This is a type that lets you put together many federal educational loans to become one. The outcome is that you will only have to pay once a month instead of doing many payments. Absolutely no application fee is required for consolidating federal loans to become direct loans.
Is it wise to consolidate my loans?
First you need to weigh if consolidating will be beneficial to you, and compare it against your monthly payments. Actually, loan consolidation allows you to sum various loans into only one and grants you a repayment period up to 30 years. This will in turn allow you to turn over from variable interests to fixed interest rate.
The downside is that the prolonged periods of repayment means you will pay more interest. Also changing to consolidation loans can make you lose borrower benefits given with original loans that can include loan cancellation and discounts.
Which types of loans are able to be consolidated?
They include federal student loans, health education assistance loans, direct subsidized loans, existing consolidation loans, federal nursing loans, direct plus loans, direct unsubsidized loans, federal perkins loans, among others.
Note that private education loans don’t qualify for consolidation. Also, being a defaulter will require you to comply with some necessities in order to consolidate the loans.
Which time is fit for consolidating your loans?
The best time for consolidating your loans is after you have graduated from school or when one leaves school either by dropping out.
What necessities does one need to consolidate a loan?
If you need to get a direct consolidation loan, here are some tips you need to be familiar with.
l You need to have one direct loan which is in repayment or in grace period.
l If you are a defaulter and need a consolidation loan, you have to make some repayments schedules with your lender prior to consolidating.
l Under normal circumstances, you cannot consolidate an already
l Generally, you cannot consolidate an existing consolidation loan. That can only happen if you re-consolidate the existing consolidation loan minus adding any other loan.
What interest rates apply on consolidation loans?
Direct consolidation loans have fixed rates of interest for the whole repayment duration of the loan. The fixed rates are centered on the average interest rates of the total loans being consolidated. Normally, they are rounded off to the nearest 1/8 of one percent. Also, no capping on interest rate of direct consolidation loan.
When does repayment begin?
Generally, repayment starts 60 days after the loan is distributed, or it can be earlier than that. Always the lender will brief you when to start repaying. The duration of repayment can be from 10-30 years, but this is in dependence of the consolidation loan amount, and the repayment schedule you select.