Student Loan Consolidation Refinance

Many people thought that student loan consolidation and refinance are the same. The truth is, they are not. When you are going for refinancing, the loan agencies usually will ask you to make a certain payment either as early settlement penalty or as processing fee. But you are free from these kinds of payments when you consolidate your student loan.

So, what is student loan consolidation exactly?

Consolidating your student loan is simply combining all your outstanding student loans into a single and new loan. When you combine the loans together, you will enjoy a single monthly payment, manage your loan properly and most importantly, you can enjoy lower interest rate.

As you should of guess, interest rate plays an important role in your monthly repayment. Imagine that you have 3 outstanding loans with each of them charging normal interest market rate. It does sound fair for the loan institution to do so because you owe them money after all. But since you can earn lower interest rate by just consolidating all your loans, doesn’t that option sound more logical?

Many loan consolidators said that you can save a few thousand dollars by going for student loan consolidation. Just think about what you can do with thousand of dollars in your pocket now. This is indeed an option you should spend time looking into.

Do you know that you can also improve your credit score when you consolidate your outstanding loans? This is because your credit score reflects on your capability and reliability to dealing with debt.

Imagine that you are a banker who is responsible for loan approval and you are now looking at an approval from someone with bad credit. Wouldn’t you doubt the applicant’s ability to repay the loan?

But by consolidating the various outstanding loans, the loan consolidator will pay off the loans and start a fresh loan account with you. In other words, your credit score will show that you have settled all your student loans. So, instead of holding 3 loans, you are now only servicing 1 loan hence the improvement of your credit score.