Questions To Ask Before You Consolidate Your Student Loans

Federal Student Loans Consolidation is a free federal program that allows anyone with loan debt to combine their student loans from the federal government to extend their repayment period and lock in your rate.

The terms and conditions of all student loan consolidation federal government are established by the Ministry of Education U. S., which means that all combinations of federal loans for students, at least initially, equal. No penalties or fees in advance, and each lender has to offer the same and the failure of federal relief, and the same initial consolidated interest rate.

This rate is based on a weighted average interest rate of all loans defaulted student rounded to the nearest 1/8th percent.

So if all creditors provide the same terms and conditions of Federal Consolidation loans, and all have the same initial velocity, what is the difference between donors of consolidation?

The difference between lenders offer borrower benefits. These differences can be pretty substantial, and ask the right questions, smart borrowers can get the best deal on consolidation federal student loans.

Interest Rate Reductions

The services most commonly offered in the federal student loan consolidation is a reduction in interest rates. This benefit is usually offered in two parts: a. reduction of .25% of debt and b. 1% interest rate reduction after 36 months of timely payments.

This is a great advantage that can greatly reduce the total interest paid on loan consolidation. A loan of 30,000 dollars, this benefit alone can save a borrower more than $6500 in interest! Although this is an advantage, there are some things to ask the lender before proceeding with the loan:

1. Ask the lender if the delivery was blocked the payments after having performed in 36 months time.

This means that after winning the 1% reduction in interest rates, the benefit can not be removed even if the final payment in the future.

Most companies consolidate add 1% to the rear in case of delayed payment after the delivery has been assigned. Many people do not bother, assuming they will always make your payments on time.

However, most consolidation loans will be more than 10 years to pay and the chances are of being a brunette in the course of time. Clarify with the lender when a payment is considered late. Any reputable company should provide at least a grace period of 10 days before payment is considered late.

Remember, just because you have the payments must be auto-loaded from a bank account, does not mean it will always be on time. If there are sufficient funds in the bank account, payment may be rejected and considered late.

2. Ask the lender if the payments need time to be consecutive to receive the lowest interest rate.

Many companies eliminates the advantage if you put the loan of tolerance or deferral. This may also include a reference, if you decide to go to school.

Reliable Lenders will not remove the advantage of exercising his right for your consolidation federal loan deferment or forbearance.

3. Ask the lender what will happen to benefit if the loan is sold.

No matter what you call a lender, consolidation loans sold many.

Make sure that if you sold your loan, will not lose its rate cuts. There are horror stories of borrowers make 30 payments on time to discover that their consolidated loan had been sold to a new lender who will not meet the reduction of 1% of the rate they were originally promised.

Cash Back Rebate

One advantage of being relatively new, touted by the construction companies for the repayment of money is recoverable.

This is usually a percentage of principal balance that is applied to the loan or sent to the borrower as a payment in cash. This can be a very attractive offer, especially in the form of a cash payment to the borrower.

It's hard to resist a check for thousands of dollars, but compared with the economies of cuts in interest rates, repayment of funds is generally not the best financial offer.

For example:

A creditor that offers a discount rate of 1.25% for timely payments, and another lender offers a discount of 3% of a consolidation loan $60,000. A creditor who provides money for repayment of the borrower will send you a check for $1800 after making 10 payments on time.

Creditor countries will reduce the rate of 1% after 3 years of payments on time. The CashBack sounds tempting, but when you realize that the reduction rate of 1.25% would save more than $32,000, significantly reducing the interest rate is the highest profit.

1. If you decide to go with a company that offers cash back option, make sure to read the fine print. Many companies require a claim form must be filed within a certain period of time for the process of returning money from profits. If the module to return the money for payment is not received, will disqualify the borrower's repayment.

2. Ask the lender what exactly is necessary to receive the tax refund money before submitting an application signed consolidation loan. Many companies combine the reimbursement of funds to repay other obligations of the debtor. A company requires the borrower to sign for their newsletter with a valid e-mail for the credit is granted.

The Federal Student Loan Consolidation is a great way to manage the debt of student loans and save thousands of dollars in interest payments. Putting the right questions and know what to look for, you can maximize your savings and make sure you get the best deal possible on the consolidation loan.