How To Get The Most Savings From Student Loan Consolidating

How to​ Get the​ Most Savings from Student Loan Consolidating
The goal of​ student loan consolidating is​ to​ improve your overall financial picture; whether that means lowering monthly payments,​ improving a​ credit score,​ or​ reducing debt to​ income ratio .​
Student loan consolidating packages offer some of​ the​ best money-saving incentives in​ the​ loan industry .​
Understanding how these different incentives affect your repayment can help you​ to​ make a​ smart choice when it​ comes to​ student loan consolidating.
The Effect of​ Interest Rate on​ Student Loan Consolidating
This tiny little number has the​ largest overall financial impact in​ regard to​ the​ total amount you​ will spend to​ repay your student loan .​
Even a​ fraction of​ a​ percentage point can equate to​ thousands of​ dollars over the​ lifetime of​ a​ loan .​

Advertised base interest rates for student loan consolidating are similar from one company to​ the​ next .​
Your due diligence in​ shopping for a​ lender to​ handle your student loan consolidating will truly pay off when you​ begin to​ compare interest rate reduction opportunities .​

Interest Rate Reductions
Interest rate reductions are money saving incentives offered by companies that specialize in​ student loan consolidating .​
Not every lender offers interest rate reductions,​ and those who do offer a​ broad range of​ percentage savings .​
With a​ little research,​ you​ can find lenders offering total interest rate reductions of​ up to​ 1.5%.
On Time Payments Interest Rate Reduction
If you’re planning on​ making your payments on​ time anyway,​ why not be rewarded? Some lenders offer interest rate reductions just for making on-time payments .​
Some lenders such as​ ScholarPoint offer a​ reduction of​ up to​ one full percentage point after only 24 months of​ on-time payments.
Be conscious of​ the​ number of​ months the​ lender requires before qualifying for this discount .​
a​ reduction applied after 36 months into your loan as​ opposed to​ 24 months means you'll be paying higher rates than necessary for one full year .​

Auto Pay Interest Rate Reduction
Because payments made on​ time are so important,​ some lenders will reward you​ with an​ interest rate reduction simply for having your payments automatically deducted from your account each month .​

Many lenders and government programs offer reductions at​ a​ rate of​ 0.25% .​
However,​ with a​ little research,​ you​ can find auto-pay interest rate reductions of​ up to​ a​ full 0.5% .​
For the​ borrower,​ this is​ a​ triple win .​
It means less paperwork,​ no worries about late payments,​ and a​ significant amount of​ savings over the​ course of​ the​ loan period.
Principal Reductions
A principal reduction is​ when the​ lender handling your student loan consolidating subtracts a​ fixed percentage off of​ your loan balance .​
Each lender offers different guidelines for qualifying for their principal reduction benefit .​
the​ most common incentive offered is​ for completing a​ set number of​ consecutive on-time payments .​

Principal reductions differ from interest rate reductions in​ that the​ savings is​ applied to​ the​ remaining balance on​ your loan but does not affect the​ interest rate at​ which you​ will pay off the​ balance .​
While principal reductions may initially seem like a​ larger savings,​ you​ could pay more than if​ you​ had chosen a​ lender offering a​ seemingly small interest rate reduction .​

Cash Back Programs
Cash back programs are exactly as​ they sound .​
After a​ certain number of​ consecutive on-time repayments,​ usually 33 months,​ some student loan consolidating companies will return up to​ 1% of​ your original loan and credit this to​ your remaining balance .​

When a​ cash back incentive is​ applied,​ money is​ actually deducted from the​ remaining balance after meeting the​ guidelines of​ your student loan consolidating lender .​
For example,​ after qualifying for a​ 1% cash back incentive on​ your $30,​000 loan,​ your current balance would be reduced by $300 .​

Choosing a​ Company to​ Handle your Student Loan Consolidating
Many of​ the​ incentives offered are rewards for favorable repayment behavior and are presented through different types of​ savings packages .​
Using a​ Student Loan Consolidating Calculator online can help you​ calculate the​ potential savings of​ your options .​
By comparing the​ options and savings incentives of​ different student loan consolidating lenders before making a​ decision you​ can save thousands of​ dollars over the​ course of​ your repayment term.

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