Consolidating loans through private or direct loan consolidation offers immense benefits to borrowers.
One of the most significant benefits includes easier single monthly repayment option, deferment options and possible reduced rates of interest.
If you are running one or more student loan, then you can contact the direct loan servicing center for a possible Federal consolidation loan.
As opposed to the Federal consolidation, private loan consolidation is not possible with Federal student loans.
This is because private lenders cannot match the low rates of interest on the Federal loans.
Private consolidation loans just replace one or more private student loans.
So, the main or probably the only benefit obtained by opting for this loan is ensuring a single monthly payment.
There are chances of reduced monthly payments when the loan terms are reset.
Another aspect that can reduce the interest rates on your private consolidation loans is your credit score.
If there is a significant improvement in the credit score, borrowers can benefit from reduced interest rate.
Since completing college, if you have landed a good job and have made an effort towards improving your credit score by fifty to hundred points, you can consolidate your debt with another lender to get a lower rate of interest.
Direct loan consolidation on the other hand offers deferment benefits and since the Federal interest rates are already high, you may not be able to get a significant lowering of interest rates.
As compared to the private consolidators, direct consolidation does not charge very high processing fee.
Federal consolidation loans offer considerably lower rates of interest and superior benefits as compared to the private consolidators.
Go through the various advantages and disadvantages before you choose any private or direct loan consolidation.