Posts Tagged ‘Loan’
Debt Consolidation: Is It Worth It?
Loan consolidation converts multiple debts into a single manageable loan. Many debt relief companies provide the service of loan consolidation. But, the positives and negatives need to be pondered over properly before deciding whether or not to consolidate your loans.
ADVANTAGES:
§ Having all the loans under the same Social Security Number (S.S.N.) in turn helps you in lowering the interest rate on the accumulated amount and thus the total amount to be paid back is reduced.
§ Consolidation also helps to unify many monthly payments into a single one. This will help you manage the payments easily and effectively.
§ Apart from the benefit of having one large loan instead of many, the loan can be extended too.
§ The interest rate on the consolidated loan is also fixed and thus it does not change during the course of the loan.
§ A student with a consolidated loan does not need to spend time keeping track of the payment schedule for two, three or more loans as one can just make a single monthly payment. Often the student elects to make that single payment through an automatic debit.
§ You also get a chance to improve your credit score by consolidating your loan that can fetch you fresh loans in case of emergencies.
§ There is no fine charged if the installments are not paid on the right date.
DISADVANTAGES:
§ The disadvantage with consolidating loans is that you have to begin making your payments right away, when you consolidate student loans during your initial six-month grace period. This can be difficult if you have not found a job after graduation, although you can wait until just before the grace period ends to consolidate, and still receive the lower rates.
§ Furthermore, once you have consolidated your student loans, you cannot un-consolidate them again.
§ These are secured loans and thus require something that the recipient owns as collateral for the loan.
