Tag Archives: consolidation
Federal Student Loan Refinancing
Federal Student Loan Consolidation is a financing facility that allows a borrower to merge his several federal student loans into a single new loan, and thereby bring them under one repayment plan. Federal student loans are generally issued or guaranteed by the United States government and comprise loans from the US Department of Education as well as the Department of Health and Human Services. These do not require any collateral security, and in contrast to private student loans, have low rates of interest. The Stafford loan is one of the most popular federal student loans.
When a borrower consolidates federal student loans, the original federal student loans are paid off by a loan consolidation company or by the Department of Education. Then, a new loan is created with one monthly payment. One of the prime advantages of federal student loan consolidation is that it lowers ones monthly payment by up to 60%. Low fixed interest rates, reduced monthly payments, and retention of subsidy benefits are other merits. Federal student loan consolidation offers several flexible repayment options and varied deferment options to choose from. Depending upon the amount of the debt amount, the repayment period extends from the standard 10 years to 30 years.
However, certain conditions are to be met for availing federal student loan consolidation. Only loans with an outstanding amount of $7,500 can be consolidated under this scheme. Private student loans are not eligible for federal student loan consolidation. Federal Perkins Loans, Federal Stafford Loans (both subsidized and unsubsidized), Health Professions Student Loans (both subsidized and unsubsidized), Health Professions Student Loans (HPSL), Nursing Student Loans (NSL), Federally Insured Student Loans (FISL), Auxiliary Loans to Assist Students (ALAS), Federal Supplemental Loans for Students (SLS), National Direct Student Loans (NDSL), Health Education Assistance Loans (HEAL), Federal Parent Loans for Undergraduate Students (PLUS), and Loans for Disadvantaged Students are eligible for consolidation.
What is a Secured Loan and what are the risks? (Page 1 of 2)
A Secured Loan is a loan secured on the homeowners property very much in the same way as a Mortgage is. A Mortgage on a property is known as the 1st Charge a Secured Loan therefore becomes the 2nd Charge. If a Secured Loan is never paid then obviously the Homeowners home is at risk. With the Mortgage company having the 1st charge they therefore reclaim their money first. A Secured Loan Lender would then follow as they are the 2nd charge. It is worth remembering that a Mortgage and Secured Loan Company would only ever repossess a property as a last resort.
A Secured Loan is ideal for Homeowners who are looking to raise finance by using their home as security. Traditionally a Secured Loan can provide Homeowners with a lower APR than that of an Unsecured Loan. Obviously a Loan Lenders APR varies depending on the personal circumstances of the applicant. A Secured Loan can be used for a variety of purposes. The most common Secured Loan purposes are for Home Improvements and for Debt Consolidation.
Home Improvement Secured Loan
A loan that is secured on the applicants home address for the purpose of Home Improvements. The loan can be used for a new conservatory, renovations, extension or simply for double glazing. Almost any form of home improvements can be funded by a secured loan. You may find that some secured loan lenders will require proof of what you will be using the funds for. This can be provided by simply gaining a written quote from someone who you are looking to have the work done by. Chances are a Home Improvement Secured Loan will actually increase the value of your property so it will be money well invested.
Debt Consolidation Loan
A loan that is secured on the applicants home address for the purpose of Debt Consolidation. The loan is generally used to consolidate (pay off) all existing credit by putting it into one secured loan and this generally reduces the monthly payments and therefore frees up more of your monthly income to use for more exciting purposes than clearing credit cards, store cards, loans or hire purchases! Sometimes the only way in which the monthly payments can be reduced is by taking the Secured Loan over a longer period than what the existing credit is currently on. This can increase the amount in total that you will pay back but customers who take a Debt Consolidation Loan generally are more interested in the reduced monthly outgoing on credit.
A Secured Loan can be used for other purposes besides Debt Consolidation and Home Improvements. They can also be used for a Car, Holiday or Wedding. Generally Secured Loan lenders do not raise finance for Business. For a Business Loan it may be a better route to contact your local Bank or Building Society. Why would I want a Secured Loan instead of an Unsecured Loan?
There are many reasons why.
Repayment Period A Secured Loan can normally be taken over a longer period than that of an unsecured personal loan. Unsecured Loans can normally only be taken over a maximum of 7 or 10 years. Some Secured Loan Lenders will allow the applicant to take the finance over a 30 year period and most will allow the finance to be spread over 25 years worth of payments. Obviously by taking the loan over a longer period reduces the monthly payment to the applicant although you must remember the longer you take the loan over the more interest you will pay.