When you are consolidating your student loan, what is the first thing that goes to your mind? A lot of you might say it is the interest rate. There is nothing wrong with that, in fact, as a consumer, you deserve the best interest rate when you are consolidating your loans. So, below are some tips to help you to get the best interest rate.
The easiest way for you to earn the best rate is to have a credit score of at least 660.
2. Other criteria
However, there are also other factors involve which can affect your interest rate such as your family size, the loans you are holding, future career, annual income and co-signer credit history (only needed when you are going for private student loan consolidation).
Let’s take a look at the income contingent repayment (ICR) plan. In this plan, your minimum monthly payment is just $ 5 and this amount shouldn’t be much of the trouble for most of you. However, you can only qualify for this plan when you have a family and you are a direct loan borrower. So, you see, there are much more involved than credit score when you are talking about the rate for your student loan consolidation.
3. Amount and period
The more loans you consolidate and the longer your loan period, the better rate you can get. However, this is not something worth cheering of. Although you can enjoy low rate, you are actually paying more at the end of your extended loan period.
4. Federal or private
As you probably know, federal loan consolidation doesn’t care what your credit score is, it merely locks in the lowest rate for the whole loan period. Since the interest rate for federal government student loan consolidation is review at July, 1 every year, it is best that you consolidate your student loans after that.
Although private student loan consolidation rate can fluctuate with the market rate, this means that you can negotiate your interest rate with the private loan consolidators.
You can even enjoy lower rate when you and your co-signer credit history are good. Besides that, private loan consolidators also offer various discounts and incentive so that you can save some money even you are not eligible for fixed interest rate.
5. Online services
Speaking of discounts and incentives, more and more loan agencies are willing to give you a better student loan consolidation interest rate when you adopt their online services.
And to minimize long hauling discussions, a lot of loan agencies are starting to display their repayment package and rate online. This can save you a lot of time when you are researching which loan institution to go to.