When you can’t get a Sallie Mae student consolidation loan or a Freddie Mac student loan to consolidate all student loan debts, then you need to be looking at getting a private loan from a private lender. The other challenge is finding a private lender that offers a flat fixed rate – an interest rate that never goes up during the length of the loan.
This is the goal, quest, and/or fantasy, but the reality of a private student loan consolidation is much different, especially if you want a fixed interest rate – APR. You are really looking at consolidation loan, whether or not it is for school debts or another other kind of debt.
Before you consider a consolidation loan for your student loan(s) you should make sure all of your schooling is complete and you have graduated – done and over. There is no sense in paying off student loans when you are going to be borrowing money again for another year of school, college, or community college. This also applies to just one or two semesters as well – you can’t be “going to well” (asking a private lender for money) multiple times, because the private lender will not feel good about lending you money when you are already deeply in debt, and planning to go into further debt after you have borrowed from them. The private lender will want you to be graduated and collecting a paycheck in the work force. They need to know that you now working and earning, and not spending and studying.
Today we’ll be doing some calculations on scenarios whereby you borrow money from a private lender to pay off past student loans and debts. Some of these loan examples will include debt that is not school (college or university) related, but need to be paid off in the consolidation. There is NO sense in consolidating student loan debts and not consolidating other debts. You have to have ALL debts wrapped up and being paid off on monthly installment payments. Some private lenders will allow bimonthly, biweekly, and I’ve even heard of bi-quarterly payments when the source of income for the student is working in a market that is purely seasonal.
Flexibility of Private Lenders for Student Loan Debt Consolidation
The great thing about borrowing from a private lender is the flexibility of the loan term, and agreement. Private lenders are not beholden to any company rules, regulations, or dogma. Private lenders can literally do anything they like, and receive your payments in any way they wish. I’ve heard of Angel Lenders that allow the borrower to borrow the money and start payments a year later (sometimes more). Often borrowers mistake Angel Lenders as lenders that simply give the money away and not expect repayment – this is a common misunderstanding, but many Angel Lenders provide loans with no interest – no APR – and no opening or closing fees. You still have to pay back back the principal of the loan though – still an amazing deal for students are really under the gun. You can learn more about Angel Lenders if you search these words in Google;
angel lenders clf
Trying to find a private lender to help you consolidate your student loan(s) can be very difficult and challenging to say the least. The odds of finding a private lender will go up if you use the Internet, but more of the informational aspect of the net, and not so much finding a private lender that consolidates your student loans and has some sort of fixed rate and fixed monthly installment repayment plan. Beware of web sites that claim to give private loans to students, and they charge some sort of “up front” fee to be considered as an approved borrower. Beware of the private lender that asks you to make your first repayment installment in advance of getting funded. These are scams that are all too frequently perpetrated on innocent borrowers in the United States, Canada, Australia, and the UK. Never pay anything up front before the private lender deposits the money into your bank account – NEVER.
We’ll be using our calculator below to thrash out these student loan consolidations. These are examples that are very close to some real students, graduate students, and borrowers who used private lenders to pay off their debts – we’ve changed the names and some of the locations across the US for the privacy of the applicants and the lenders.
Example #1 – Fixed Rate Private Student Loan Consolidation for $60,000
In this loan example the private lender was in living in Ohio and the borrower was living in Texas. They found each other on the Internet using a lender/borrower database web sites.
The total of the student loan debts was 60,000 dollars. Actually, in this case Jim owned 57,856 dollars in student loans. His private lender gave him a loan for 60,000 over 10 years at an interest rate of 5.5 %.
The calculation results are below so you can see Jim’s monthly payments and total interest to be paid on the loan for the entire term.
Loan Summary;
Loan principal amount – $60,000
APR (annual percentage rate) – 5.5%
Payment Periods – Monthly
Length of loan – 10 years
Private Student Debt Consolidation Debt Loan Results – Jim’s Example – Fixed Rate 5.5%
Loan Calculation Results
Total Amount to be payed: $76,635.86
Total amount of interest $16,635.86
Payments: $629.88
Example #2 – Fixed Rate Private Student Loan Consolidation for $35,000
In this loan example the private lender was in living Miama, Florida, and the borrower (Carla) was living in South Carolina. The lender and the borrower used the Prosper site to connect and make an agreement based on an APR (annual percentage rate) of 12.34% over a 15 year period, and payments made biweekly (every two week payments)
Loan Summary;
Loan principal amount – $35,000
APR (annual percentage rate) – 12.34%
Payment Periods – Biweekly (every 14 days)
Length of loan – 15 years
Private Student Debt Consolidation Debt Loan Results – Carla’s Example – Fixed Rate 12.34%
Loan Calculation Results
Total Amount to be payed: $67,475.34
Total amount of interest $32,475.34
Payments: $172.54
Conclusion
As you can see in these two examples, the total interest paid to the private lenders is quite high. Sometimes private lenders can be more expensive than your typical conventional lenders such as banks. Often a private lender will seem to cost more but it’s the flat rate/fixed rate part of the loan that is the key.
If we’re talking about a fixed rate, and there is a great amount of flexibility, and no ridiculous fees, penalties, and hidden costs, the ex-student can feel more secure in the student loan debt consolidation.
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A LOAN CALCULATOR FOR CRUNCHING YOUR NUMBERS IS BELOW; Enter your loan amount, how many years, the interest rate, and payment frequency (14 for biweekly, 30 for monthly, 7 for weekly. Very helpful so you know exactly what the loan will cost you in interest payments and you will know the total COB (cost of borrowing).
2 Comments
There are many debt consolidation programs out there. Do your homework so you know what questions to ask before calling one. Find out if their program is right for you.
That’s for sure. Never be in a rush or come across like you are desperate for a consolidation loan.
It’s not the end of world, and you can get your personal finances under control.
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