Student Loan Consolidation Services, How to Choose the Right One

Submitted by Wade Nembhard

TC Money and Finance Articles

Many students who borrowed money to offset the cost of higher education will inevitably come to a point when they need to consolidate their student loans into one single account to avoid paying multiple lenders and reduce the interest accrued on the loans. There's a variety of consolidation programs available to help ease this matter. But beware, all consolidation programs are not created equally, neither are all of them right for you. Some do lure you with the promise of low interest rates for a long period of time, but if you begin to miss payments due to economic hardship, you might not have the option to defer your payments, or even worse if you default on your loan their methods to recollect that debt might not be so fair. So don't jump into signing up with any available consolidation program, weigh your options carefully.

There are certain features that a good loan consolidation service should have when trying to get you to bring your loans under their handling. This list should make it very simple and easy to decipher which services will serve your best interest in the long run or short period of time depending on how much you have to pay back.

1. Make sure every potential consolidator have a solid professional reputation and is a strong and reliable financial institution. If they've only existed for a very short period of time or do not have a strong record of consolidation, please stay away from them.
    
2. Do not hesitate to question their representatives about the legally and authenticity of their business operation, the decision to consolidate impact your credit record greatly.
3. The consolidator must be able to reduce your monthly payments by at least 50% of your previous payment.
    
4. You should earn further discount in interest rate or incentive by using the auto debit and paying on time to the loan consolidation institutions. So, make sure the institution you go for offer these features.
    
5. Make sure they provide multiple repayment options, and that you can change a repayment plan whenever it's beneficial to you. So narrow down your list of loan consolidators to ones that offer multiple repayment plans that suit your particular need.
    
6. The loan consolidators must be willing to waive the processing fees or pre-payment penalty for you. The representatives might not tell you this, so it is your responsibility to get this answer from them. If they are unwilling to do this, definitely move on to another consolidator.
    
7. The student loan consolidation services should be willing to approve your consolidation application without the presence of a co-signer or a credit check.
    
8. The loan institution must be able and  willing to approve your deferment or forbearance application when you face financial hardship. They should also be able to offer you other repayment options while you attempt to get out of financial difficulty, such as paying the interest only on your principal loan balance.
    
9. Since you're consolidating your loans into an extended payment period, they MUST offer you the lowest interest rate possible in the current market. Even with a damaged credit history, the option for a very low interest rate must still be an available option.
    
10. Some of your target institutions might have higher interest rates, but they may offer other consolidation packages to make up for that weaknesses. These other packages they offer must greatly benefit you financially otherwise they are not worth the higher loan consolidation interest rate.

Follow these tips whem selecting a financial institution to consolidate your student loan debt and you should be ok for the entire period of your loan.