Private Consolidation Loans

When it comes to shopping for the best private consolidation loans, former students must first understand the marketplace. There are plenty of options in this industry, as the internet has truly opened the doors to companies that might have otherwise flown under the radar. As a consumer, you have the power and the leverage when looking for private consolidation loans. Most students have a combination of federal and private loans, and it makes sense to consolidate private loans to bring those rates down. When choosing among a number of different lenders, you will want to consider the possible rates first, but that can’t be your only concern.

Qualifying for a competitive rate
So what rate should you be looking for with your private consolidation loans? This will vary from lender to lender, and it will depend upon your credit score. Most students pay big rates on their student loans in the beginning, because they have no credit to work with. They only have the promise of higher education to use as collateral for the loan. Additionally, loan companies have the leverage in the early going, as they know that students have to have financing to make college a reality.

With these things in mind, know that you have the leverage with private school loan consolidation. If you are out of school with a job and good credit, you deserve to pay lower rates. Many of the large private loan consolidation companies will offer a competitive rate of right around 7.5%. Some will go a bit lower than that for former students with excellent credit. This would put your private loans at a rate just above your federal loans, making them affordable over the long term. As you search for these rates, keep Fannie Mae, Chase Bank, and Wells Fargo in mind. These three financial institutions have led the private consolidation industry of late.

Looking for more than just a rate
As you research these companies and the other options, you will discover that companies and their loan offers are more complex than just a simple number. Do yourself a favor and look for extensive background information on various companies. If they are offering a solid rate, that should put them in the running, but you need to know more. How does this company treat its borrowers? Are they willing to adjust the terms of a loan a few years down the road? Are they accommodating and easy to work with. Private consolidation loans represent a huge debt with a single lender. Make sure that lender is one you can work with.

Ultimately service is something that you will have to experience for yourself, but you can get a good idea of how a company operates by reading various reviews. One of the reasons why Wells Fargo and Chase have taken the lead in this industry is their unique approach to customer satisfaction. In addition to simply reading reviews, get in touch with private consolidation loan providers, just to get a feel for how they operate.

Obtaining the loan
Debt consolidation lenders will typically offer a couple different options for people who qualify. Many will pay your previous lenders directly, eliminating your responsibility to those accounts. From there, you will need to negotiate appropriate loan terms. The standard term for these loans is ten years, but students should be aware that it is a new ten year period. If you have been paying the loans for a period of time, your total debt amount will be spread over another decade, lowering your monthly payments but raising the total amount to be repaid. When obtaining the loan, there will be discussions on the rate, but you won’t have a ton of say on this. Students with good credit can hope to see rates in the 8% range, while those with poor credit or no credit will usually receive rates between 9% and 10%.

To make the process easier, students can prepare credit worthiness packages. This is especially effective for students with a lack of true credit history. If you have successfully paid utility bills or a cell phone bill for a few years, then list that on your makeshift credit report. Any sign of financial responsibility on your part will help bring down the rate as you obtain private consolidation loans.