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Debt Relief – Insolvency – Bankruptcy Information » Student Loan Help » what is the catch with loan consolidation?

what is the catch with loan consolidation?

Why would a student loan company advertise loan consolidation? Is there a cost to consolidting student loans, or any other loans? What is the lowest rate you can expect if you consolidate now? When is a good time to consolidate?

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5 Responses to "what is the catch with loan consolidation?"

  1. mntnck says:
    when i did it once the only catch is that not all companys will alllow it. and if you miss even one payment they drop you and you have to go back and pay all the money.
  2. Annie says:
    One thing to watch for is that when you consolidate your education loans is to be sure you keep all the rights to deferment you previously had. Basically, this means that if you go back to school half time or more, np payments are required until you graduate or drop below the required credit hours and interest will not accrue. Deferement can also be used when you are unemployed or injured/ill and unable to work, but interest may continue to accrue under these circmstances. Most lenders do not charge fees for consolidating private loans and it is illegal to charge fees to consolidate federal education loans. Interest rates for consolidation of federal loans is dictated by the government and at the moment is at about 5.75. Private loans tend to run closer to prime and interest rates can run from 8.75 up to 13.0 depending on your credit and if you use a co-signor. Most education loans can not be consolidated if you are still in school. Once you graduate, you have a set amount of time in which to consolidate, or the loans will have to be repaid individually, as agreed upon with the original lender (federal loans usually come due 60 days after graduation while most private loans have a 6 month grace period in which to consolidate). Generally speaking, consolidation is best, but be sure to check the interest rates you got when the loans originated. You will get information on payment options and plans from the original lenders at least 30 days prior to graduation. If you leave school before then, you will need to contact lenders to begin the process. Do your homework and do the math..it is the only way to work out what is the best plan for you.
  3. angel_nurse82 says:
    Consolidation was a blessing for me, no extra costs, just an assurance to the loan companies that they were going to get paid–if the student has 6 loans what is the chance they are going to make 6 fifty dollar payments right out of college versus 1 one hundred and eighty dollar payment??? The only problem I had was that 2 companies accepted my consolidation, (without my knowledge) I had begun making payments to one, and had made 3 pmts, the other started sending me invoices that I owed them payments, and I had to call and straighten it out. Just watch out for that.
  4. dancingwiththestarsfanfj says:
  5. Jimmy John says:
    The best time to consolidate is when interests are starting to get charged to you. (different according to the type of loan you get).

    There’s no catch, but you need to understand that you’ll pay 2 times the loan if you consolidate over a long-time.

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