Student Loan Consolidations Companies – How to Select the Best Loan Consolidation Lender

Consolidating your student loans is a way of merging together all the loans you took from different lenders under a single student loan consolidation company. How do you select the best consolidation lender that will offer you the best repayment terms? Picking the wrong consolidation lender will hurt your budget and general economy. It is very important to follow some guidelines to help you choose the best consolidation company for you. Private against federal If your prior loans are from a federal source, you will be on the lookout for a federal consolidation. Federal loans are more convenient than the private ones due to the lower rates of interest. If the loans to consolidate are from a private source, you will usually go for the private consolidation lender because the federal company will not offer you a good interest rate for consolidating private loans. The reason for choosing this way is that interest rates and terms vary for both. Although some private lenders may offer you amounts that consolidate most of your debt, you should always go first for the federal company if most of the loans you need to consolidate  are federal. As a rule of the thumb, getting loans from private consolidation lenders mean meeting more requirements than from the federal ones. Private lenders base their loans on creditworthiness and will be looking more at your credit score - if you have any or the co-signer you present. Interest rates Interest rates are determined by private lenders based on two factors: the standard rate used for loans, (LIBOR) and your credit score. A higher credit score means a lower interest rate that will be applied. Your aim is to try to find a consolidation lender that will offer the lowest interest rate possible. Interest rates can be fixed or variable. The first is the preferred choice. Not all federal lenders are offering consolidation loans now but the ones doing so calculate interest rate as the weighted average of the individual interest rates of the loans being consolidated. Terms and conditions Aim at finding a lender that offers you the best terms in relation to: a) Loan Amounts – Choose the lenders that can offer you a loan that covers all your debt. b) Fees, usually determined by your credit score. These are usually application fees and origination fees - fees applied to issue the loan. c) Deferment  - the  period of time between the time you take the loan and the time you start repaying. d) Repayment term - the length of time to complete the repayment. e) Check if co-signers are required.