Debt Consolidation (Deciding to Consolidate your Debt)
You are up to your ears in student loan debt. You have monthly bills to pay and having to handle those student loans are going to keep your ends from meeting. You have to decide on a next step. You will either omit a bill this month and repay the loan debt or ignore the loan debt for yet another month. You have options. You can get in contact with the lenders who hold the loans that are outstanding, even delinquent.
This will enable you to make payment arrangements that may decrease your installments or defer them to a later date. You can default and wind up bankrupt. This ruins your credit for years to come and jeopardizes your future purchases of a car or home. You can choose debt consolidation for your student loans. Choosing this option requires a great deal of thought and should be taken very seriously. It can be the difference between overcoming debt and succumbing to it.
Pros of Debt Consolidation
- Choosing debt consolidation to handle your student loan payments can do the following:
- Reduce your monthly installment by over 50%
- Extend your repayment period up to 30 years
- Give you a single lender to deal with for all your loans
- Allow you no penalty for early repayment and possibly have other fees omitted
- Guarantee you a low interest rate
Cons of Debt Consolidation
- Even though it can be enormously helpful, debt consolidation can also:
- Increase your payments overall
- Delete your grace period if you consolidate while enrolled
- Delete your repayment incentives with the original lender
- Extend the life of the loan
- Drag a spouse into your debt if you jointly consolidate
Get the Best Deal
When you do decide in favor of debt consolidation you need to shop around. You may first want to get in contact with your current lender to find out if they offer debt consolidation for student loans. Sometimes you can get the very best deal by sticking with the lender you are already familiar with. Additionally, you should read and understand all of the information sent to you by the consolidating lender.
Ask all the questions you like and do not accept a loan that you do not fully understand. Even if you do not understand the terms you will be responsible for repaying. You should at least know what you are paying for. Whenever possible, you should increase your debt consolidation loan installment payment. This will enable you to repay the loan quickly, without penalty from the lender.
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