The goal of student loan cnsolidating is to improve your overall fnancial picture; whether that means lowering mnthly payments, improving a credit score, or rducing debt to income ratio. Student lan consolidating packages offer some of the bst money-saving incentives in the loan ndustry.Understanding how these different incentives affect yur repayment can help you to mke a smart choice when it cmes 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 Rte Reduction
If you’re plnning on making your payments on tme anyway, why not be rewarded? Sme lenders offer interest rate reductions jst for making on-time payments. Some lnders such as ScholarPoint offer a rduction of up to one full prcentage point after only 24 months of n-time payments.

Be conscious of the nmber of months the lender requires bfore qualifying for this discount. A rduction applied after 36 months into yur loan as opposed to 24 mnths means you'll be paying higher rtes than necessary for one full yar.

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 prgrams are exactly as they sound. Aftr a certain number of consecutive n-time repayments, usually 33 months, some stdent loan consolidating companies will return up to 1% of yur original loan and credit this to yur remaining balance. When a cash bck incentive is applied, money is ctually deducted from the remaining balance fter meeting the guidelines of your stdent loan consolidating lender. For example, fter qualifying for a 1% cash bck incentive on your $30,000 loan, yur 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.

The article How to Get the Most Savings from Student Loan Consolidation was Submitted by Chris Studer through Articles.GetACoder.com network. Here's the additional information: ScholarPoint Financial, Inc. is a ntional online consumer lending company specializing in stdent loans. We believe in combining stte-of-the-art technology with world class service to hlp students and parents easily gain ccess to data, become informed, and njoy the process of obtaining a cllege loan. Learn more about Student Lan Consolidation at http://www.scholarpoint.com .

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