So, you're finally done with school and have entered what adults like to call "the real world." You may feel like all of the money you earn goes straight to paying off your debt, leaving you with nothing to spend on yourself.
So, you're thinking about combining your loans, but is that really your best option? Yes, it really is! This is why. By consolidating now, you can save hundreds or even thousands of dollars in interest that you would have paid over the years if you hadn't done it. Especially now, when interest rates are the lowest they've ever been and it's a great time to take advantage of that fact. Also, when you combine your loans, it's easier to pay off your debts. Most importantly, you are lowering your overall interest rates, which will save you a lot of money over longer periods of time. But you must get a fixed rate, or the interest rate could go up over time. Be wary of companies that try to get you to join by giving you low interest rates at first. These rates will go up quickly, leaving you with a high interest rate.
When you consolidate your loans, you only have to make one big payment instead of a number of smaller ones. Most of the time, the monthly payment is less than what you pay for all of your loans together. This gives you a little more money to spend. In the long run, this could save you money and give you more cash to spend on things like furniture or stereo equipment. Or, instead of spending it, putting it into savings will be much better in the long run than spending it. If you only have one payment, it's easier to keep track of your loans. This could mean you miss less payments and have a better idea of how much debt you have.
When you combine your debts, you make it possible for your interest rate to be lower. This is because there are times when you can put off paying your loan or use forbearance to get your interest rate to drop even more. This means that more of your monthly payment goes toward paying off the loan's principal. Which means you'll get your money faster. If you can find a consolidation plan that doesn't charge a fee for paying off the loans early, you can pay them off faster. As you make more money, it's best to have a plan where you can pay off your debt early without being punished. This can help you get out of debt even faster. Tax breaks are another good thing about consolidating student loans. Whether or not you itemise, you can claim a deduction that can reduce your taxable income by up to $2,000.
Another benefit of consolidating your student loans is that it can help you improve your credit score. This is because the number of creditors on your credit report will have gone down. The more creditors who are trying to get money from you on your credit report, the worse your credit score will look. One consolidated loan means you only have to deal with one creditor. This will improve your credit score right away. Then, when you've made all of your payments, your credit score will go up even more.
Now that you know all the advantages and benefits of consolidating your student loans, doesn't it make sense to do it? Consolidating your debt can give you more cash, make payments and payment schedules easier, improve your credit score, give you tax breaks, lower your interest rates, and even help you get out of debt faster. So, why don't you just do it?
