Debt consolidation loans from various financial institutions in Toledo are one option to consolidate debts. If the loan has better terms than the consumer debt getting consolidated then the result will be lower interest rates and lower debt payments. The problem usually is finding a debt consolidation loan that has more favorable rates. Doing so all most always requires the debtor to secure the loan with collateral. More often than not this collateral is a residence and the loan is a home mortgage.
An Unsecured Loan
If there is no collateral available or the debtor does not want to provide any then the only option is to get an unsecured loan. Unsecured loans with better interest rates and payment terms than standard “off the shelf” consumer debt can be very hard to find in Toledo, especially in today’s credit markets. If credit is not perfect then most likely only a subprime personal loan to consolidate debt will be available. This has a very low chance of improving the debtor’s financial situation and will most likely damage it.
Toledo – Personal Loan to Consolidate Debt
Going to College costs a great deal of money. No only do you have to consider your tuition, you need to pay for textbooks, room and board. Students use student loans to pay for a number of their college needs. Majority of these students have multiple student loans. Each loan has a different billing cycle, creditor, and interest rate. One way to make paying these loans easier is loan consolidation. Loan consolidation is having all your student loans turn into one new loan. This one loan is handled by one creditor. There are two methods of loan consolidation: Federal and Private loan consolidation. When looking for a loan consolidation company that's right for you, you need to consider their interest rates. Interest rates are a major part of any loan.
Federal loan consolidation is funded by the U.S. Government or the U.S. Department of Education. Either the Government or the Department of Education combines your multiple student loans into one new loan. The interest rate on Federal Loans change according to the 91-day Treasury bill or T-Bill. This may vary each year, each May. Federal Loan Consolidation rates are set on the US Treasury and by the Congress. The Federal interest rate is the weighted average of student loan interest rates. The interest rate for Stafford loans will be the T-Bill plus 1.7%, while for federal PLUS loans, the rate is the T-Bill plus 2.3%.
Federal loans are currently at a fixed rate, but that can change. Originally, the federal interest rate was a fixed rate, later turned into a variable, but on July 1, 2006 it returned back to a fixed rate. With federal loans there is a possibility it may change in the future. Federal loans include Stafford Loans and PLUS Loans.
Stafford Loans are fixed-rate loans. For Stafford Loans you have subsidized and unsubsidized Stafford Loans.
For Subsidized Stafford loans that are paid out to graduate and professional students, the interest rate is fixed at 6.8%. Interest rates for subsidized Stafford loans, for undergraduate students are:
- For loans first paid out between July 1, 2006 - June 30, 2008, is fixed at 6.8%.
- For loans first paid out between July 1, 2009 - June 30, 2010, is fixed at 5.6%.
- For loans first paid out between July 1, 2010 - June 30, 2011, is fixed at 4.5%.
- For loans first paid out between July 1, 2011 - June 30, 2012, is fixed at 3.4%.
- For loans first paid out between on or after July 1, 2012, the interest rate is fixed at 6.8%.
For Unsubsidized Stafford loans, the interest rate is fixed at 6.8%. This is disbursed to undergraduates and graduate students.
The interest rate for PLUS loans first paid out beginning July 1, 2006 is fixed at 8.5%. The rate on PLUS loans first paid on or after July 1, 1998 but before July 1, 2006 is variable and may change annually on July 1 but will never exceed 9%. The current interest rate is 3.28%.
A private loan consolidation company is a private creditor or company. Their interest rates vary. Interest rates are based on either LIBOR (London Interbank Offered Rate) or the prime rate. The credit history is also considered for the student and co-signer. These loans are variable or have a fixed rate that changes according to the agreement in the promissory note. In some cases some private student loan consolidation loans could be the same rate as federal to compete with federal low interest rates.
Types of Debt Consolidation Loans
Student loans consolidation is a concept which is designed to help students repay their multiple education loans they have taken during studies. Most students land into deep debt and have problem managing various loans as well as face financial difficulties in making the monthly payments. The solution of these problem is student debt consolidation; here all your outstanding student loans are merged into one loan with just one payment to make every month. This new loan is offered at a lower and fixed rate of interest, lower monthly payments, various payment options and longer tenures.
Student loans consolidation offers various benefits. The rate of interest is lower than all your consolidation loans and thus you pay lower monthly payments. The interest rates are locked, therefore it is shielded from the inflation rates. The loans have a flexible repayment options and no fees, charges or penalties. Also there are no credit checks and co-signers required.
Your monthly payments could be lowered by around 54%. You typically have 10 years to repay your loans, but in student loans consolidation your tenure can be extended to up to 30 years.
You will have to be eligible to get the student federal loan consolidation. Some criteria to be fulfilled are, you must be in the six -month grace period after completing studies, after which the repayments start. The other case is that you have started paying the installments already. Then, your total loans outstanding must be at least $7500. You have taken loan from different lenders and you can consolidate your loan just once.
Which Loans Are Eligible:
There are also certain loans that can be consolidated under the student loans consolidation programs:
You can get these loans from any bank or financial institution which participates in the Federal Family Education Loan program. The student debt consolidation loan term and conditions should be verified with your lender. The interest rate offered is generally the same by all the lenders but some lenders also offer future discounts if your repayment record is good and also discounts if your monthly payment is to be debited directly from your bank account.
The whole process of student federal loan consolidation usually takes 30-45 days. It is the best way to manage your financial responsibilities after college. Your multiple loans will be turned into one loan with just one payment to make every month. The student loans consolidation will be convenient for you and because of the lower interest rates; it will be financially beneficial too.