Government Debt Consolidation Loans – Update

Darnell Scott asked:


With so many companies looking to acquire the business of students who are looking to consolidate all of their student loans, it’s easy to be taken in by some of the unscrupulous companies in the market. You don’t want to just take the word of the person who is representing the company because of course; he or she is only going to give you the positive information. You have to know what information is probably correct and what information is just a sales pitch to get your business.

When you look for a company who is willing to consolidate student loans into one payment, you want to find one who is willing to work with you on a payment plan that meets your needs. You want to find someone who can offer you a plan with lower payments at an attractive interest rate. In order to do this, it will be necessary to investigate both the possibility of a private student loan consolidation as well as a government student loan consolidation loan. Of course, your current situation may only quality you for the government student loan consolidation. Things such as unverifiable income or bad credit may prevent you from obtaining private financing, but the federal programs require no income verification or history of good credit.

To be assured that you are dealing with a company that has good credentials, unless the debt consolidation company happens to be a lending institution with whom you are familiar with, always check them out through the Better Business Bureau. The main thing you need to know is if there are any complaints against the company, what they were, and the outcome of the complaints. You want to be sure the company you are considering is not simply a debt management company looking to attempt to con you into a settlement on your loans, and thus, ruining your credit. When searching for a company with whom to work, you want to be certain that the company is not a “loan shark” outfit that is going to charge you an exorbitant amount of interest to consolidate your loans. When you research the companies, keep in mind that federal consolidation loan average 1.5% to 4.5%, and you don’t need a job or credit to qualify. Even private student consolidation loans are usually under 9%, so if you are to speak with someone who charges more than that and is not able to give you a term that averages ten to twenty years, you need to look for another company.

The research is an important aspect of finding the right company for consolidating the student loans. You need to be sure that the company you choose is doing everything possible to meet your needs and that the plan you choose is going to help you pay off the student loans and not just get you deeper into debt because of a high payment or interest rate. Make sure you have done all the research and know what you can and cannot do, so that you can write the deal you want based on your research. By knowing beforehand the options that you have, you can make sure that the company you choose will give you the best deal that is possible based on your needs.



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Rl Aguirre asked:


Many of us graduating or who had graduated from college carry a large financial burden in repaying our student loans. Add in other responsibilities such as rent, mortgage, car payments, maybe even a family, the weight can indeed be very heavy.

Examining options that could help relieve financial burdens is always a good idea. In this article, it’s about the student loans. Your student loan is one place to begin.

Colleges and universities user several sources in securing loans for qualified students. One bank does not typically issue an entire 4-year loan or even a 1-year loan. Usually, it takes multiple funds from various lending institutions to get a student through his college career.

That is the reason why you’re writing several checks a month when paying your student loans. Of course, these loans carry with it different interest rates and different billing cycles. They may also have different borrowers benefits.

You don’t have to be in a financial crisis in order to consider a private or government student loan consolidation. Sometimes, it’s just smart money management.

STUDENT LOAN CONSOLIDATIONS ARE LOANS

First, let’s understand that a student loan consolidation is a loan. You’re getting one new loan that will pay off the multiple existing loans. Hence, at the end of the month, you get one bill instead of many. You pay one check, instead of writing a few. Consolidation can be very convenient.

THE GOOD: WHY STUDENT LOAN CONSOLIDATIONS ARE RIGHT FOR YOU

Besides the simplicity of a single check, there are other good reasons that you should consider.

For example, when a student loan consolidation rate is lower than the average interest rate of your multiple loans, you may end up with a lower monthly payment. You can invest the money that you save.

Also, a lending institution may have more attractive student loan consolidation incentives than what you currently have such as rebates or last month free.

Sadly, a borrower may have to consolidate in order to avoid defaulting in any of his existing student loans. As mentioned earlier, when consolidating, that borrower is in fact getting a new loan that pays off the existing loans. By doing so, the loan that is about to default gets paid off and is assumed as part of a new, but bigger, loan. By consolidating timely, that borrower avoids a very bad mark in his credit report.

THE BAD: WHY STUDENT LOAN CONSOLIDATION IS NOT FOR YOU

Just as there are good reasons for student loan debt consolidation, there are drawbacks that you must consider before speaking to a smooth talking consolidation counselor.

In fact, if there’s one thing that you should remember from this article, then it should be this passage. Just because someone shows you a lower monthly payment, it doesn’t always mean that you’re saving money. The big picture could be the opposite. Because in order to get a lower monthly, the length of repayment may have been extended. So that your loan payment period is now 30 years instead of 10. Longer payment means higher cost of the loan.

Also, some programs that may be advertised as low interest student loan consolidation may not have a forbearance or forgiveness provisions. These provisions can be helpful in situations when you need relief. Lastly, if there are any attractive borrowers bonus, such as rebates, you may lose it.

WHAT TO DO

A good student loan consolidation program can save you money and ease your monthly financial burden. But keep this in mind, the best student loan consolidation is the one that’s custom-made for you because your situation is different from the next borrower. Just like any financial products, you must shop. There are a number of online sites that let you compare student loan consolidation programs. The good ones list the banks, their rates, and the provisions. Use these sites as tools to your advantage.



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Vinny, JC asked:


Before we delve into what are unsecured consolidation loans or even what is unsecured debt consolidation, first we need to understand debt consolidation. Properly defined it is, “The act of combining several loans or liabilities into one big loan. Debt consolidation entails taking out a new loan to pay off a number of other debts”.

A perfect example of a secured loan would be your mortgage. The bank loans out money to buy a house – the house becomes the asset backing the loan. The bank or mortgage company can go behind the homeowner and foreclose on the property if they default on it. So, the loan is secured (laugh! Not really with the 2008 CDO crisis) by the real property.

So what are unsecured consolidation loans?

It is this big loan that we end up getting into to pay off all the other loans without having to give any collateral. In other words, it is the new loan that we take to consolidate the existing debt, without having any asset to back the loan up. Unsecured debt consolidation is the exact opposite of secured loan.

So what would an exact opposite mean? The bank or the lending institution loans you the money without having any kind of real, valuable, or tangible asset to back the money that is loaned, and it can’t reposes any of your assets if you were to default. So, it’s basically your choice now, to either pay one big monthly payment or multiple small bundles that, when added together, would equal the big payment.

Now you are thinking, hmmm….there should be some catch in it, why would someone give an unsecured loan and run the risk of not getting paid.

Read about unsecured consolidation loans at http://debtconsolidationandpeace.com and pros and cons of getting into debt consolidation. Read my other article of how to get out of debt fast



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