Although there are programs to help consolidate federal student loans with lower interest rates, you'll need different strategies and source if you're trying to get private student loan consolidation. When you're trying to determine consolidate student loans to your financial advantage, consider your current source of funding and private student loan terms to discover what new loan or discount opportunities are best for you. Use these tips to come up with the best private student loan consolidation plan.
Instructions
1. Check your current credit score before you attempt to get private student loan consolidation lenders or terms. You can request a free credit report from one of the consumer reporting companies (Experian, TransUnion and Equifax) or through an official website such as AnnualCreditReport.com. You'll obtain your score immediately if you request the credit report online or in about two weeks if you want it by phone or mail.
2. Compare your current credit rating to the credit score you had when you originally took out the private student loans. If there's been a significant increase in your credit score (about 50 points or more), your current lenders may lower the interest rates on your loans if you indicate that you're shopping around for new private student loan consolidation rates.
3. Contact other lenders to find one that offers student loan consolidation that takes your improved credit score into account if your current lenders won't alter their rates. Or, if your credit score hasn't improved since you took out the private student loans, find a lender that will combine your loans and extend the term of your loan. This way, you'll have a single, lower monthly payment with a 25 to 30 year term.
4. Consider asking a relative to co-sign when you consolidate private student loans if your own credit score hasn't improved. By using their excellent credit rating, you can get a much lower APR on your student loan consolidation. Be sure they understand that they'll be liable if you default on the loan, however.
5. Ensure you find a lender that offers private student loan consolidation without any pre-payment penalties. This will allow you to make larger payments from time to time or pay off the entire student loan if you receive a windfall without additional fees. Although the Higher Education Act guarantees federal student loan pre-payment without penalties, this is something you need to secure under the terms of private student loans.
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