You may have found a great job after graduation and are busy building a career. However, your job may not be making you rich, and private loan payments are taking a significant portion of your budget. Buying a home and starting a family may be your next goals, but that will put more pressure on your finances. Consolidating your private school loans into a single new loan can lower your interest rates and payments. The process can take several months to complete, but it's easy to do.
Instructions
1. Do the math regarding the costs of obtaining a new loan and the amount you can save with the lower interest rate offered by the consolidation loan. Know what you want to achieve. Consolidating private school loans makes sense if you can lower your monthly payments or want to receive a single bill. However, Carol Stack, co-author of "The Financial Aid Handbook: Getting the Education You Want for the Price You Can Afford," states, "If your goal is to get out from under the debt as quickly and cheaply as possible -- consolidation might actually cost you more over the life of the loan."
2. Talk to your current lenders regarding alternatives that may save you money. "They would rather keep you as a customer than lose you to another bank or to using a home equity loan or other instrument to pay off your student loans," says Stack. "Explaining your goals and asking for their best option could be really worthwhile."
3. Compare options from reputable sources such as Wells Fargo, Chase, your personal credit union and the Student Loan Network. In a 2009 article for "Forbes," David K. Randall states, "Ask a consolidator whether it charges origination fees, if there are prepayment penalties, what the maximum interest rate is and what the life of the loan will be. Steer clear of any lender that charges a prepayment fee. You'll want the option to pay off the loan early without being penalized for it."
4. Decide on a lender and apply to consolidate your private school loans. It will take four to six weeks to complete the process, and you will need to keep your loan payments current throughout.
Tags: school loans, interest rate, life loan, loan payments, lower your, private school