There are numerous benefits of consolidating your student loans. This can help you in improving your credit rating and saving money. The following are the main reasons why it is important to consolidate or streamline these debts.
Enjoy low interest rates
You should avoid procrastinating and and make an effort of organizing with the federal or state student consolidation at the end of every year. This will help you in taking advantage of the low interest rates offered on consolidated loans. This interest rate is sometimes as low as 4.7 %. You can save a significant amount of money by securing a low interest rate.
Peace of mind
Most of the people who have taken many loans have been having sleepless nights wondering how they will manage to pay their monthly loan payments. To make the matter worse, these individuals have other bills that need to be paid at the end of every month. Consolidating your education loans can help you in saving up to 50% or 60 % on your monthly payments.
Streamlining your payments
Many people have racked up many loans, some of which have varying amounts and interest rates over their school time. Such people are usually confused in keeping track of their bills. Consolidating your loans will make your life simple since you will be dealing with only one lender and be paying one loan.
Signing up for auto-pay when you are consolidating your loan is another great way of simplifying your bill paying. Again this will save you the stamp fees and the time taken in writing the different cheques.
Enjoy discounts for paying your loan on time
Just like with the auto pay, lenders will reward their clients with discounts for paying their loans on time. For you to enjoy these benefits, it is important to make sure that you are paying your loans in good time and consistently.
Improving your credit rating /score
The new lender will help you in paying off your loan once you have consolidated your student loans. Paying your loan and reducing the number of loans is one of the effective ways of improving your credit score. Banks Lenders will always check your credit score before lending you any money.
Help your parents
Probably your parent might have borrowed some money to pay your college fees. These loans can also be consolidated and then locked in the current rates.
Forbear or defer
Have you completed paying or consolidating your loans? Individuals who have paid their loans are given an opportunity of retaining their borrowing privileges by the state or federal government.