However, there are specific instruments called debt consolidation loans, offered by creditors as part of a plan to borrowers who have difficulty managing the number or size of their outstanding debts.
Creditors are willing to do this for several reasons – one of them being that it maximizes the likelihood of collecting from a debtor.
A loan with a longer term may have a lower monthly payment, but it can also significantly increase how much you pay over the life of the loan.
View the Total Cost of Borrowing Before you apply, we encourage you to carefully consider whether consolidating your existing debt is the right choice for you.
Here's what you need to know before deciding to consolidate student loans.
Loan consolidation is when a borrower takes out a new loan to pay off several smaller student loans.
Instead of making multiple payments to multiple lenders, the borrower only has to pay off the new consolidation loan, says Michelle Pezzulli, vice president of operations for Credit Union Student Choice, a student lending service provider in Washington, D.
C."That new loan will have its own interest rate; it will have its own repayment terms; it will have its own terms and conditions," she says.
There are several ways consumers can lump debts into a single payment.Once your debt is consolidated the difficulty in juggling several commitments will be relieved and you can once again feel on top of your finances whereas before it may have been a struggle.Keeping on top of your finances has never been more important than today in light of the newly introduced credit reporting laws.The new laws mean that potential credit providers now have access to more comprehensive information about your level of indebtedness and more specifically, the way you manage your debt.Until now, credit providers could only see your personal details, credit infringement information and the amount of times you may have applied for credit (assuming that the credit provider made an enquiry).
Consolidation provides grads with the ability to combine their student loans into one megaloan, but it comes with drawbacks.