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.
Student loan consolidation is a way for graduates to have all their student loans combined into one loan. This loan is handled by one creditor. The creditor pays the multiple loans in full, leaving the student to pay for one new loan. Students no longer need to pay multiple student loans with separate billing cycles, dates or interest rates. They now have one loan and one interest rate, to be paid to one creditor.
When considering loan consolidation. You should do the research. First know the terms of agreement, monthly payments, and interest rates for each loan and creditor before looking for a loan consolidation company or program. When selecting a company or program, make it a point to compare them; know their terms of agreement, interest rates and obligations. Once you have carefully selected a company or program you feel is suitable for you provide them the information you had gathered.
There are Federal and Private Student Loan Consolidations. Federal Student Loan allows a student to have all their Federal loans combined into one new loan.
The government provides Federal programs such as:
o The Federal Family Education Loan Program (FFEL). FFEL will soon be replaced by the Direct Loan program and Pell Grant and the Federal Direct Student Loan Program (FDLP). These programs allow students to have their loans from Stafford Loans, Federal Perkins Loans and PLUS Loans combined into one Federal loan. These are fixed-rate loans backed up by the U.S. Government, offered to students and parents.
o The Federal Direct Student Loan Program (FDLP) was created by the U.S. Department of Education in effort to assist parents and students with their loans.
Private Loan Consolidation is combining private student loans into one new loan. Before considering private loan consolidation, apply for a federal loan, the reason for this is to better maximize federal loans that are available. Private companies such as Sallie Mae recommend it.
Here are several Federal Loans:
o Perkins Loans are funded by the government. They carry a very low interest rate but are need-based, a financial officer would determine if a student is eligible.
o PLUS Loans are for parents of undergraduate students. There are also PLUS Loans for students as well. Payments on this plan will begin once this loan is approved. PLUS loans allow you to take up to 10 years for repayment. Commercial banks and online lenders offer PLUS Loans for both parents and students.
o Stafford Loans offer a low interest rate. They do not raise their interest rates any higher. Stafford loans do not require a student to pay any interest while at school and are not required to pay the loan in the six months after graduation. It offers 10 years for repayment.
Here are a few private companies that offer Loan consolidation:
o Loan Approval Direct offers interest rates as low as 3 percent. Reducing a student’s monthly loan to as much as 60 percent.
o SLM Corporation or commonly named Sallie Mae. Sallie Mae offers a range of options depending on the type of school or what education program a student would have. Such programs include Federal Stafford Loan, Parent PLUS Loan, Graduate PLUS Loan, Sallie Mae Smart Option Student Loan, Continuing Education Loan and Career Training Loan.
o Citibank provides programs such as CitiAssist Undergraduate and Graduate Loans, CitiAssist Health Professions; CitiAssist Residency, Relocation and Review Loans; and the CitiAssist Law and CitiAssist Bar Exam Loans. Students receive a 0.25% interest rate reduction in their auto-debit payment program. These programs take up to 20 to 25 years to repay.
o EdFed is another private company. By selecting one of their plans a student can lower their monthly payment by as much as 60 percent. They also provide interest-only payments. The fixed interest on EdFed is the weighted average of the interest rates of the loans a student consolidated, rounded to the nearest 1/8th percent.
Refinancing student loans is a decision that approximately 2 out 3 college graduates face each year. After your graduation you have approximately 6 months to begin a repayment program of some kind for your student loans, and it is always a good idea to consider refinancing student loans as a way of reducing your monthly payments and your overall cost of the loan. You reduce your overall loan ownership cost when you find a consolidation loan that has an interest rate lower than the loans you currently have. It is important to understand the process of refinancing student loans before you set out to actually get involved in signing a loan agreement.
There are a lot of reasons to consider refinancing student loans. Each loan carries its own service charge each month and consolidating those loans will eliminate the multiple service charges and bring it down to just one service charge. If you can find a consolidation loan that has an interest rate lower than the lowest interest rate of the multiple student loans you currently have, then you will lower your monthly payments as was mentioned before. A couple of interest points can make a huge difference in how much you wind up paying each month, and how much interest you are responsible for paying back throughout the life of the loans. It is possible that you graduated college with multiple loans that you have to pay back and it is just easier to have only one loan to pay versus having to administer several loans each month.
The process of consolidating student loans varies depending on what kind of student loans you have. If you have loans that are guaranteed by the federal government, then there is a program you can get involved in after graduation that will allow you to consolidate those loans at the lowest available interest rate. Many students have what are called Stafford loans, and these are loans backed by the federal government. Getting a consolidation loan for government back student financing is not a difficult process, and it can be done at any bank that participates in the Stafford program. In most cases government-backed student loans do not cover the costs of going to school; so many people are forced to get private student loans. Unfortunately these loans are not backed by the federal government, and in order to consolidate these loans the student must work out a loan program with the financial institution directly.
When you consolidate your student loans you have the potential to lower your monthly payments, and you make life a lot easier by only having to worry about having one loan payment as opposed to multiple loan payments. You have been accruing interest all throughout school, and depending on what kind of loan you have you may be responsible for paying that interest back as part of your student loan repayment. A consolidation could make those payments lower by offering a lower interest rate. If the numbers match up, then consolidation becomes a good choice.
Sometimes the numbers do not match up and getting a consolidation loan is not a good business decision. If you secured all of your student loans back when interest rates were very low, and you are considering consolidating at a time when rates are high then a consolidation loan could cost you more than paying them off individually. It is also smart to consider the size of the loans you are looking at before you group them all together into one loan. If you take a relatively small loan and group it into a consolidation loan you have then added more interest to it and extended the amount of time it would take to pay that loan back. Look at each loan individually and determine which ones you can pay off relatively quickly, and which ones need consolidation due to the size of the loan.
A payday loan is a small short term loan you can use to cover expenditure until your next payday. You can apply online and the decision to loan you the money is made almost straight away. In most cases the whole application can be completed online and the money loaned can be credited into your bank account on the same day as you make your application.
A payday loan is an unsecured loan, so it is not dependent on collateral, such as you owning a house or car etc.
Generally when you make your first application you can borrow any amount up to £300, depending on your take home pay. You are more likely to be approved the less you want to borrow, so it is advisable to borrow only what you need. Once you have successfully repaid loans with one particular company they may then offer to lend you anything up to about £750 in subsequent loans.
Payday loans can provide a useful solution for short term cash flow problems.
Who can apply for a Payday loan?
In order to be eligible for a payday loan you must be over 18 years old and in employment with a take home wage of at least £750 per month. You must also have a bank account with a valid debit card.
Even if you have bad credit history you should still be able to obtain a payday loan as long as you fulfil the above criteria.
How do you get a Payday loan?
The majority of payday loans are available online, so there is no delay with faxing or posting of documents. The application process is quick and easy to complete. You will be asked for your name, address, details about your monthly income and employment, when your next payday is, along with the amount you wish to borrow and your bank account details.
Once you have submitted your application you should hear back from the payday loan provider within minutes. They will email you with their decision to the email address you have registered with your application.
Payday loan providers partly make their decision as whether to lend you money dependent on the amount you want to borrow compared to the amount you earn. Only borrow what you need, the less you borrow the more likely that your application will be accepted and the smaller the amount of interest you will accrue.
If your application is successful you will be sent, by email, your loan agreement showing the amount that will be lent to you, the repayment date and the amount of interest you will pay on the repayment date. Along with the loan agreement you should also be sent loan conditions. These loan conditions should outline your rights under the Consumer Credit Act 1974 along with details about repaying the loan, cancelling the loan and the use the personal information you supply when applying for the payday loan.
If you are happy to proceed you sign online by providing details of your name and answering a security question such as your mothers’ maiden name. Then, email this back to the loan provider and the money will be deposited into the bank account you registered at the application process. The money can be deposited in your bank account on the same day you make the application, so this is a very fast and efficient way of borrowing money short term.
How do I repay the loan?
You will need to repay the loan amount and the interest accrued on the repayment date as specified in the loan agreement. The repayment date is usually your payday, hence the name payday loan.
The repayment will be collected by the loan provider by debiting the bank account you registered at the application process, which is the bank account into which you get your wages paid.
Repayment over a longer period
Payday loans may be extended if you find yourself in a position to be unable to satisfy all or part of the amount due on the repayment date. If this happens it is recommended that you contact your payday loan provider as soon as possible and explain your circumstances to them. They will then be able to explain your options and how to go about extending your loan.
Even if you are not able to fully settle the repayment amount, it is advisable to pay off as much as possible on the repayment date. This will help to keep the amount of interest you owe to a minimum. Some companies may charge you additional fees for extending your loan, you should check if this is the case before you sign your loan agreement.
Regulation of Payday Loan Companies
Properly regulated payday loan companies must adhere to strict laws governing the finance industry.
As with any financial product you apply for it is always advisable to check that the company offering the loan is properly regulated. The payday loan company you are applying to should show its Consumer Credit Licence number within its loan conditions and it should also be authorised by the Office of Fair Trading. If you are in any doubt as to whether the payday loan company you are considering applying to is fully regulated then you are within your rights to contact either of these bodies for further information.
As long as the payday loan company you are applying to is properly regulated, there will be a recognised body to make any complaints you may have to and you can be assured that you will not be subject to any unfair practices.
What are the benefits of a Payday loan?
One of the main benefits of a payday loan is the speed at which the cash can be credited to you. The money you need can be available to you in your bank account on the same day that you make the application. This can provide valuable assistance if you have a short term cash flow problem and need money in an emergency.
The application process is very simple, it takes just minutes to apply for a payday loan and you do not have waste time posting or faxing documents to the payday loan provider, as you would with other more traditional high street loans.
Poor Credit History
Payday loans are available to people with a poor credit history. This is because payday loan companies do not solely make their decision to lend based on a persons credit history. As long as you fulfil the application criteria you have a good chance of obtaining a payday loan. For many people a payday loan may be the only way they are able to obtain credit, especially in the current financial climate where the majority of lenders are unwilling to provide loans altogether, never mind to a person with a poor credit history.
Use of the Loan Money
You do not have to tell the payday loan provider what you need the payday loan for. You can use the money for whatever you want. You may need money in an emergency which can not wait until payday for instance; emergency medical or dental treatment, to settle a bill quickly, extra spending money on holiday or even for a romantic weekend away. The choice is yours as long as you make the repayment due on the repayment date.
No Upfront Costs
There are no upfront costs associated with a payday loan. You do not pay anything back until the repayment date you have agreed to in the loan agreement.
Why does the APR appear high on payday loans?
The APR applied to payday loans appears at first glance to be high. This is very misleading, but there is a simple reason why this figure looks so high. APR is an Annual Percentage Rate, and as such is calculated over a whole year (365 days). However, a payday loan is taken usually only over a number of days or weeks.
The APR calculation was not designed to apply to very short term loans such as payday loans. It was designed to apply to long term loans in existence for a year or more. It is really a theoretical figure than enables people to compare similar longer term loan products, like mortgages or ongoing credit balances.
Rather than relying on the APR rate it is more advisable to look directly at the loan agreement to see exactly how much interest you will be charged for the period of your payday loan. Some companies have a standard interest charge for the amount you wish to borrow regardless of the duration of the loan. It is then up to you to decide whether you will be able to repay both the cash advance you receive initially and the interest amount on the repayment date.
Many people do not have savings or access to credit cards or more traditional loans and so the convenience of a regulated payday loan provides piece of mind should the occasion arise that they need some money quickly.
If you need money in a hurry, can not wait until payday and are confident that you can make the necessary repayments on the repayment date, this could be the ideal solution for you.
Overall, payday loans are convenient, easy to access and offer a viable option for people who require money quickly for whatever reason.
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Payday Power brokers same day payday loans in the UK. Visit us online for more information. Payday Power is a Reset Finance company
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