By Joseph Nykoluk
How to Compare Student Loan Consolidation Programs
Before you decide to borrow new funds to pay off other student loans you need to know how to compare student loan consolidation programs first. As with all businesses, consolidation loan companies are eager to do business with you.
Everyone it seems wants to give you a loan – as if they are actually giving it to you for free. As a student, you could easily end up paying more than you really need to. You have a choice. You can either make the loan company happy by paying them more than you need to – OR – you can do your due diligence by doing your homework first and then make yourself happy instead.
So, now that I’ve got you all psyched up, here are 4 tasks or points to consider when shopping for the best deal on student loan consolidation programs. The first thing you need to do is to:
1. Compare Student Loan Consolidation Rates
The first factor you want to look into, of course, are student loan consolidation interest rates. When beginning your program comparison with the goal being to consolidate your student loans, the biggest point you need to consider is the rate of interest you will charged.
Looking for an interest rate you are comfortable with can mean the difference between enjoying a weekend vacation with friends and staying at home with a box of popcorn and a cheap movie.
All, or most businesses, have one of two types of income generating mindsets. They either charge more per unit and make less sales, or charge less per unit and make more sales. Sometimes, if the business is lucky they can have it both ways. Nevertheless, again as in all businesses, it pays to shop around.
If you are smart you will look at a number of student loan consolidation programs and then write everything down in a note pad. A spreadsheet like Microsoft Excel is great for this. Make separate columns for each factor you want to consider before signing the contract for that consolidation loan for your student loans.
Just remember that the lowest student loan consolidation interest rate does not mean it’s the best for YOU! There’s more to consider, such as…
2. Compare Student Loan Consolidation Company Terms and Conditions
As I mentioned above, the interest rates you will be charged for your student loan consolidation program is not the only thing to consider when comparing which company you should go with.
What looks like the best student consolidation loan rate when you first look at it may in fact be very different by the time you sign your contract. You need to read and understand COMPLETELY, the terms and conditions of the loan contract.
It will do you no good at all to the the best student loan interest rate in the world, only to discover that you need to pay huge gigantic fees either upfront or at a future date.
…AND…most importantly…ASK QUESTIONS…ASK A LOT OF QUESTIONS!
3. Compare Student Loan Consolidation Repayment Terms
While you are going through the terms and conditions, probably the single most important consideration is to compare student loan consolidation repayment terms.
There are always two sides to any contract and each side wants to be protected from the other in case of one side is unable to fulfill their obligations.
One one side, the company may want a high up front fee or that the first consolidation loan repayment be immediately. On the other side, you the student, would rather pay the fee at a later day, or the first payment be made in 2 months time.
You will only do yourself a disservice by joining a student loan consolidation program just to get it over with so you can get your student loans out of the way. All you end up doing is trading one debt for another debt, and if you’re not careful, you could end up paying even more.
Take a hard look in the mirror and realize your situation and how you think is the best way to handle it. Put your thoughts in the future and how your actions today will affect your future. If you are married with a new baby on the way in 6 months, how will your monthly payments be affected after the baby is born? Think about more questions like these.
In conclusion, your own discoveries may lead you to higher student loan consolidation rates but better terms that you can handle in future months when you have another mouth to feed.
Looking into the repayment terms, and looking at your situation, not only today, but in the coming months and years, will give you an indication of whether you can pay it off or not. It can be better to go for a higher rate, with better repayment terms, than it is to go for the best rate that has a repayment structure, that doesn’t meet your needs.
4. Compare Student Loan Consolidation Incentives
The customer is the lifeblood of any business and, as such, loan companies want you to be their customer, so compare student loan consolidation incentives to see what it is that they have that you want. – plain and simple.
Before you sign on the dotted line, the incentive that the consolidation loan company offers puts you in power. As I mentioned, all business want you, the student, to buy their student consolidation loan or they will go out of business.They need to give you a very good reason to sign up with them.
You have to be careful though, because companies are smart too. They cannot give you complete power, so they may put a time limit on their incentive offer. I have been in many situations where I was desperately looking for a product and found an offer I just couldn’t refuse.
There can even be a trade off with loan incentives. Depending on how you handle it, these incentives may end up costing you a higher student loan consolidation rate than originally thought. It’s all a balancing act. Again, each side to a contract wants to get the best deal for themselves FIRST.
Whatever you do, do not act just because your lender tells you that you should act. You need to do your own homework.
Doing all this comparison shopping can sure be a lot of work, but it’s work worth doing. A famous writer, I can’t remember who right now, once wrote that - “If it’s worth doing at all, then it’s worth doing well”. So, do your homework well and compare how much you will save when you know how to compare student loan consolidation programs.
For more information on student loans see my Student Loans Guide.
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Which is the Best Student Loan Consolidation Company For You? | Private Student Consolidation Loans Says:
[...] While doing your research into consolidation companies, you may wish to read this article on how to compare loan consolidation programs. [...]