Student Loan Consolidation Interest Rates - Don't get scammed!

These days, it appears that it is the norm for most students to apply for some kind of financial loan to assist with their further studies after school. And with that comes the eventual search for the lowest possible student loan consolidation interest rates.  If you have had a few loans given to you over the years of being at college, you might want to look at the option of consolidating these loans into one loan. One loan is far more manageable and it could have a better, competitive interest rate, as opposed to the original rate you signed up at.

For most students, the interest rate you pay for a consolidated student loan makes a big difference in your monthly repayments. And even if it is small difference in the payments, that can add up over the life of the loan and end up saving you hundreds or thousands of dollars.  There are quite a few benefits to be gained by consolidating your student loans, so let's be clever about this and have a look at the best way to go about acquiring a consolidated student loan.

One major advantage of student loan consolidation will be that you will now only have to pay one institution on a monthly basis, rather than trying to manage 2 or 3 different loans.  No more scrabbling around looking for the details of 2 or more different lenders!  Having one account will enable you to make bigger payments on other high interest bearing bills. And the vast majority of these bills are not tax-deductible like a student loan. You will also be less frustrated and less likely to miss a payment, which counts towards your credit rating score.

Finding and applying for the best student loan consolidation interest rates has never been more important.  This may be for the rest of your life as an adult in the working world, so be sure that you explore all of your options and different payment plans and interest rates.

There are many long-term advantages of consolidating your student loans with a lower interest rate that you many not realize!  Let's take a quick look at a few of them that can, and will make all the difference in the world!

Lower student loan consolidation interest rates are the key to having a bit more monthly spending cash down the road.  Imagine yourself working after graduation and getting yourself established in a house and having to buy a car.  Of course, you want the best house and the best car that you can comfortably afford, right?  The last thing you want to worry about is a couple of large student loan payments with higher interest rates.  Consolidation can do two things here: Lump all of your loans into one, and possibly free up some money in your budget.

How much money are we talking here?  Well, if you get a low student loan consolidation interest rate, you could safely say that there should be an extra $100 to $200 saved...per month!  That could mean the difference between driving a small, compact, gas-saver car to driving a nice mid-sized, sporty car!  Just by consolidating your student loan!

By consolidating these loans with a low fixed interest rate, you will be able to manage your budget more effectively. In 2007, Congress passed a law which forbids borrowers from having to repay more than 15% of their total income. So, any way you can rework your student loan is to your advantage as long as the terms and the interest rate are right for you.

Also, choosing the right type of student loan consolidation is important.  Student loans applied for from federal lenders and those from private lenders are different and they are seen as two completely separate kinds of loans which you will find out when you start enquiring about consolidation.

Lenders from the private sector vary their calculations of interest by using the prime rate or the London Interbank Rate (LIBOR) that is offered. An extra one to five percent is added on as an origination fee and this is included in the loan amount. A Federal loan obtained from the government is structured differently. They look at all your loans and work out an interest rate between the lowest and the highest up to a limit of 8¼%.

For your own sake, it is vital that you negotiate the lowest student loan consolidation rates possible. You need to research the current interest rates and the prime rates, including the LIBOR rate as these are the rates from which your lender will work out a base rate, and then work out your consolidated interest rate.

Student loan consolidation lenders will also take into account your history as a debtor, so take care that you never miss a payment. It is also necessary for you to know how the credit bureau views your credibility, so find out your credit score. There are a number of free services on the internet that will tell you your credits score, but be careful.  If you have your credit reported to you numerous times, this can actually HURT your score.

These days it's getting increasingly more difficult to obtain any type of loan or consolidation.  It is no use applying for a consolidated student loan when you have never managed to pay on time or have missed a payment here and there. 

Make a list of all the institutions that offer student loans, and then outline the student loan consolidation interest rates of those.  The lowest rates will be the most attractive, but make sure there aren't any hidden fees associated with them, and also make sure the payment plan and terms of the loan consolidation are a good fit for you. 

Find out all the information you can about them and how their loans work. Then start contacting each of them and enquiring about their interest rates, and also ask them what their best consolidated rate would be. Apply at a couple of theses lenders for your student loan consolidated account and when they offer you the loan, turn it down.  Sometimes, they could well come back with a better offer.  Or, you can call them and tell them about lower student loan consolidation interest rates offered by their competitors.  The worst that can happen is that they don't lower their rates for you.

Lastly, just because you apply for consolitation, doesn't mean you will be approved.  The only way you will know is if you apply, so get out there and do the leg work!  You may not get that lower rate that you're in search of, but at least you will feel satisfied that you did absolutely everything you could to get the best student loan consolidation interest rates possible.