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Student Loan Consolidation, look this gift horse in the mouth. Part II
By Ian McAllister
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Student loan consolidation is excellent - for
some people. Spot the hidden trap that could
ruin your life... a clever animal can steal from
a trap without being caught!
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* Part I Don't get into debt. Ways to avoid it.
* Part II This article
* Part III Idea beats student loan
consolidation and creates a winning mindset.
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Part II
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Imagine two people
Each has a student loan consolidation debt of
$100 000. The born loser will soon have
borrowed more. The investor uses the
student loan consolidation as a springboard
to become a millionaire.
What's different between them? The mindset,
and only the mindset. Get the right mindset.
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The big trap
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Have you a strong willpower? Will you go on
a spending spree and owe $5000 on each
card tomorrow? A student loan consolidation
is not for you. Read Part III of this article.
Have you the will power to master your
finances? Combine student loan consolidation
with Part III.
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What is Student Loan Consolidation?
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You transfer all your existing loans to one
low-interest account.
What's in student loan consolidation for you?
* If you have Stafford loans in the USA, you¡¯ll
have a grace period of six months after
graduation to take out a student loan
consolidation.
* Interest rates are lower
* Easier to remember payment dates with
one loan
* Improved credit rating
Credit cards might charge 20% interest.
Wouldn't a student loan consolidation at 5%
be better?
Look for extra discounts on student loan
consolidation during the grace period. Do you
get an extra discount after 2 years of prompt
payments.
Do your homework properly. Were you only
paying 3% fixed interest on your Stafford
loans and interest rates have gone up to 8%
variable rate on your student loan
consolidation? How high could the rates go?
If you get a fixed rate student loan
consolidation, and new student loan
consolidations fall to 3%?
Computers calculate your credit rating.
Suppose you took out a subsidised and an
unsubsidised Stafford loan for each of four
years. Computers can't really think. They see
that you have 8 long-term loans and never
paid back a single cent. You¡¯re obviously a
very bad credit risk before your student loan
consolidation!
After your student loan consolidation
computers see that you've only 1 loan and
you're making regular payments. They give
you an excellent credit rating. Don't spoil it
with new credit card debts.
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Avoiding student loans
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In part 1 you read about vital life skills that
mean lower student loans for student loan
consolidation, or even none. You can make
your money go twice as far, which means
that you'll effectively be twice as rich, and the
IRS can't touch you for it.
Without these life skills, you'll be helpless
when you suddenly have to pay for food and
lodgings, credit card, car loan, mortgage,
health... it's never-ending! Many students
can't handle it. Part III will help you even if
you have a student loan consolidation.
Have you decided on student loan
consolidation?
* Check how much they will lend
* Can you consolidate your other debts...
credit card and car loan?
* Will you need proof of income?
* Can you choose between fixed and variable
interest?
* Are there pre-payment penalties? Avoid
them like the plague!
* What are the penalties if you default? If
you are unemployed or lack self-discipline you
are likely to default.
* What other loans must you get - mortgage,
kid's schooling?
Avoid lenders that make you start
repayments of your student loan
consolidation the day after the grace period.
Check for special incentives. A 1% discount
after 2 years regular payments may not
sound like much, but it adds up over time.
Negotiate. Lenders are eager to lend you
money, however much they bluff. They are
legally allowed to lend 35 times as much
money as they have, and they make no profit
until they lend it.
"No start-up costs" may be good, but low
interest rates and absence of prepayment
penalties for your student loan consolidation
are better.
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What's in Part III
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A better alternative to student loan
consolidation?
* Build self discipline.
* How will interest rates for student loan
consolidation change next 20 years? Don't
know? Then student loan consolidation might
not be the best bargain.
* You¡¯ll be in control... not at the mercy of
student loan consolidation providers.
Don't be a loan addict all your life. The ideas
in part III were used by an Australian to
become a millionaire.
About the Author
You need more detail. Get it free at
http://studying-techniques.com/student-loans.html
(expanded part I)
and
http://studying-techniques.com/student-loan-consolidation.html
(expanded parts II and III)
Article Source: http://www.simplysearch4it.com/article/13694.html
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| Some other articles by Ian McAllister | |
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