Unsecured Debt Consolidation Loans
Unsecured Debt Consolidation Loan
If you are looking for a way to combine your private student loans for federal loans, you can do so through an unsecured debt consolidation loan. By consolidating your debt, you douse the need to make multiple monthly payments to different (or some cases even the same) lenders. An unsecured debt consolidation loan can also help to lower your monthly payment and lock you in at a lower interest rate.
Government student loans consolidation, by law, can only include your student loans awarded through the U.S. Department of Education. In other words, private student loans can’t be part of your unsecured debt consolidation loan if you finance it through the government. Every loan you have through the government is tracked by the Department of Education and can be accessed online at www.nslds.ed.gov.
The one thing that is nice about a government-based unsecured debt consolidation loan versus a private consolidation is the interest rate will almost always be lower. Private consolidation plans are awarded based on your credit history and ability to repay. Unless you have outstanding credit for at least the last two years, or you have a co-signer who does, you may have a hard time securing an attractive interest rate. Compare the proposed rate of your debt consolidation and the rates of your current private loans. You may need the help of someone who is number savvy, but it’s important for you to hash out which plan best benefits you in the end.
Some important things to realize about a unsecured debt consolidation loan – whether it be from a private or federal lender – is when you consolidate, the terms of you loans are reset. This means, your monthly payment actually decreases because the loan spans a longer period of time. Also, you will most likely be able to secure a lower interest rate that will reap lower payments. This isn’t always true, however, so pay close attention when signing up for a consolidation. As with anytime you decide to take out a loan, shop around for the consolidation program that best fits your needs.