Practical and Helpful Tips: Funds

How to Lower the Cost of Your Student Debt Loan Consolidation

Flexibility is one of the advantages of going for loan consolidation. When you consolidate your loan, you can choose the repayment schedule. You can know whether a particular repayment schedule will be right for you based on your financial status. For instance, if you are struggling with your finances, you can extend the repayment schedule. Obviously, you want to make it as easy as possible to pay back the loan consolidation. The following points might help you:

Shop Around
There is no point of consolidating your loan if the payments will not become cheap. Before applying for a student loan consolidation debt, find out how much you will pay in terms of interest. Choose a lending institution only when you think that you’ll be able to continue the regular monthly payments for the loan. Local credit unions may offer better rates on a loan than a bank. You can also negotiate with your lender to lower the rates on the loan.

Increase the Term of Paying Back
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Your monthly payments will be cheap if you extend the time period for loan repayment. However, remember that this may increase the total interest to be paid.
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Make Regular Payments
If you want to keep your loan consolidation cheap, it is important to make payments regularly. Some lenders will charge you some penalties if you skip making the monthly payments. Thus, missed payments may turn your cheap debt consolidation loan into an expensive one.

Use Your Home Equity
Another option you have to keep your debt loan consolidation cheap is tapping into your home equity. If you have a home, you can get a consolidation loan based on the equity accrued on your home. The initial payments for the credit is usually low you only need to pay for the interests charged. Besides, the interest payments for a home equity line of credit are also considered tax deductible.

You’ll need to own a home though, with enough built-in equity to take this kind of loan. The loan will allow you to pay off all your existing different debts to be left with one manageable debt. You’ll need to be careful if you plan on taking the credit since it involves a great risk. For example, you can end up losing the home if you are unable to pay back the consolidated loan. Apart from this, your payments will go up after you have finished paying the interest rate since you will then be required to pay the principal.

Apart from the above mentioned ways, you can also go for unconventional routes to get a cheap debt consolidation loan. Consider borrowing from your friends or family since they might be sympathetic enough to offer you low interest rates.