Interest rate of student consolidation loan depends upon the weighted average of all the loans put into the program. Let's consider a simple example. Tim has two student loans of $1200 and $1800. The rates of interest are 2.82% and 3.42%.
First calculate the per loan weight factor. Multiply loan amount with respective interest rate â€“
$1200 * 2.82% = 3384 $1800 * 3.42% = 6156
Perform the same for all the loans you have, then add the per loan weight factors â€“
3384 + 6156 = 9540
Now add all the loan amounts â€“
$1200 + $1800 = $3000
Now divide total per loan weight factor by total loan amount calculated in the last step to get the weighted average â€“
9540 / $3000 = 3.18%
Now round up this figure to nearest 1/8% -
3.18% to nearest 1/8% = 3.25%
So if Time consolidates all his student loans, the rate of interest will be 3.25%. This rate is capped at 8.25% also.
It sounds good. Some consolidators and financers offer extra facilities also. Get in touch with the counselors to collect more knowledge.
By signing up a debt counseling session, your provided details (Name, Email ID and Phone No.) will be forwarded to the company advertising on the DebtCC. However, you have no obligation to use their services.
Some creditors and collection agencies refuse to lower the payoff amount, interest rate, and fees owed by the consumer.
Creditors/collection agencies can make collection calls and file lawsuits against the consumers represented by the debt relief companies.
Debt relief services may have a negative impact on the consumer's creditworthiness and his overall debt amount may increase due to the accumulation of extra fees.
The amount which the consumer saves with the use of debt relief services can be regarded as taxable income.