The Four Types Of Direct Student Loan Consolidation
As a student, do you find it hard to repay your student loans? While student loans are great in that you and I will probably not be able to afford a tertiary education without it. On the other hand, it can be difficult to pay the monthly payments on time due to the high interest rate and other external factors which can challenge your wallet.
If you have a difficult time in repaying your student loans, you might want to consider a direct student loan consolidation.
So what is a direct student loan consolidation?
In essence, it is simply exchanging or consolidating your existing outstanding student loans with higher interest rates for one loan with a more manageable, fixed interest rate. The interest rate is determined by the average of your loans, rounded to the nearest 0.125 per cent.
A direct student loan consolidation is especially useful if you know you are about to default on your monthly student loan payments. A direct student loan consolidation can mean a new start since it is considered a new loan.
When you consolidate your student loans under a new loan, your existing loans will show up on your credit card as paid off, thereby increasing your credit score.
Before getting a direct student loan consolidation, you need to know the types of plans for repaying. There are four major types. You may like to investigate more to consider which is best for your needs.
1. Standard Repayment Plan
Standard Repayment Plan allows you a fixed monthly payment for up to 10 years depending on the amount you owe.
2. Extended Repayment Plan
An extended repayment plan allows you up to 30 years. Obviously, the longer the period, the less amount you need to repay each month. Do note, however that you will end up paying more as a whole if you spread your payment over longer periods of time due to interest rates.
3. Graduated Repayment Plan
Graduated Repayment Plan usually have a repayment period between 12 and 30 years. The main difference between graduated and extended repayment plan is for graduated, the amount of your monthly payment will increase every two years.
4. Income Contingent Repayment Plan
If you have a job, then this plan may be what you are looking for. The income contingent repayment plan set a monthly payment based on your gross annual income. Other factors include your family size and the amount owe. The repayment period is usually 25 years.
A word of caution, if you are close to paying off your student loans, then a direct student loan consolidation may not be suitable for you since you will be paying more due to interest rates over the long term.
However, if you have difficulty in repaying your student loans and it is still years away from being paid off, then a direct student loan consolidation may be the answer. Not only do you pay less interest over the long term but it can improve your credit rating as well.
Ricky Lim works in a finance company specialising in student loan consolidation. Get more information, tools and resources on student loan consolidation, visit this site: http://about-studentloan.com
He also operates a home loan information site
Are You Sure You Want A Student Loan Consolidation?
A lot of students need to get student loans in order to complete their education. However, student loans can be a huge financial burden to most people, with high interest rates. Here's where a student loan consolidation can help.
Essentially, a student loan consolidation gives you a longer period of time (as long as 30 years) to repay your student loans. Usually the interest rates are much lower since a student loan consolidation takes into average all the student loans you are currently paying.
The interest rate for a student loan consolidation is usually fixed and according to federal law, cannot be higher than 8.25 percent.
Though there are many benefits to having a student loan consolidation, many students are confused since there are such a wide variety of consolidation loans available from the government or private sectors.
Before applying for any student loan consolidation, a student has to do some research in determining which student consolidation loan is suitable for him/her.
Here are some pointers which you can take into consideration before taking out a student loan consolidation:
1. Credit Rating
It is important to know your credit score since it is a major factor in determining whether you get the student consolidation loan. If your rating is over 660, then you should not have any problems getting a loan. If however your credit rating is less than 600, you might want to evaluate ways to improve your credit score first.
Your credit rating will also determine the interest rate you have to pay for your consolidation loan. The higher the credit score, the lower the interest rate.
2. Interest Rate
Even though you can get lower interest rate with a student consolidation loan, the repayment period is usually longer. In the long run, you actually pay more for your loans. My advise would be to research for lenders who can allow you to upgrade your payment when you can afford it. For example, you may not be able to repay much when you are still a student, but once you have a job and have a regular income, it will be best to clear the loan as soon as possible.
3. Income minus Expenses
You need to evaluate your current income minus your expenses to determine your net income surplus each month. Analysis your expenses to see if you can reduce or eliminate any.
Make sure to do your research before taking out a student loan consolidation since you got only one chance at it. It is not easy to cancel it once you have signed the loan papers.
Ricky Lim works in a finance company specialising in student loan consolidation. Get more information, tools and resources on student loan consolidation, visit this site: http://about-studentloan.com
He also operates a home loan information site
Home Refinancing is Done for Many Reasons
Just a few decades ago, refinancing a home loan was relatively unknown. Most people decided to buy a house, got a 30 year, fixed-rate mortgage, and made monthly payments until the loan was paid off. Times have changed, however, and in today's mortgage market, most new loans are more likely than not to be refinanced sooner or later. Today the average loan, even one issued for 30 years, is unlikely to last more than 30 years, as owners often exchange one loan for another one.
The reasons are many, and all of them are valid. Here are a few of the circumstances under which an owner might wish to refinance his or her home loan:
Get a fixed interest rate - Three or four years ago, interest rates were at or near historic lows. Rather than lock in long-term with a fixed rate, many buyers decided then to go with an adjustable rate loan, which had lower payments and allowed them to buy more house for the same amount of money. As rates have been steadily rising since then, many of those buyers now want to convert those adjustable loans to mortgages with fixed rates.
Lower interest rate - When rates drop, borrowers often want to exchange loans obtained at higher interest rates for new ones with lower rates. The lower interest rates mean lower monthly payments.
Get a longer loan term - Perhaps a buyer took out a 15 year loan and then decided the payments were higher than he or she wanted or could afford to pay. Refinancing and swapping that 15 year loan for a 30 year loan would lower the monthly payments, although it would double the length of the repayment schedule.
Borrow money - The "cash out" refinance has been quite popular during the past five years as rates have dropped and prices have risen. Many owners have discovered that they have a lot of equity in their property. With that equity, thousands of people have taken out new home loans while taking cash out of their equity to use for home remodeling, debt consolidation, or any one of a number of other things.
Refinancing often makes sense, but homeowners should realize that refinancing comes with closing costs that typically amount to several thousand dollars. Anyone considering refinancing a mortgage should take into consideration just how long they plan to remain in the home. If it is more than a few years, then a new mortgage might be financially worthwhile, particularly if doing so lowers your monthly house payment.
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