Private student loan consolidation enables you to combine all of your non-federal student loans into one loan. It is also a mechanism by which you can refinance your existing private loans. There are a number of lenders such as Wells Fargo and Citi that offer this service and you should compare your options before you choose to consolidate your private loans. As with any loan, you have to pay close attention to the terms of your existing loans as well as those of the consolidation loan product you are considering. In every case, you want to be sure you are optimizing your outcome to ensure you don’t end up worse off than where you started.
Things to consider comparing include:
- Interest rate — Fixed or variable? How much? When can the rate change?
- Repayment term — How long do I have to repay? Can I temporarily suspend payments if I have a special circumstance?
- Total cost of repayment — how much will I end up paying back over the life of the loan?
- Credit — Is my credit good enough to obtain the loan? Will having a co-signer help obtain the loan or reduce how much it will cost?