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Managing student debt
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Consolidating debts

 
           
     
 


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DEBT CONSOLIDATION

What is debt consolidation?

Debt consolidation refers to combining multiple debts into one single loan.

What are the advantages of debt consolidation?

Combining multiple debts into one single loan can reduce interest paid, allow for a long repayment period and reduce monthly outgoings. Your debt will be cleared in a fixed period of time providing you keep up the repayments set at the outset of the loan.

Typically, the interest on a consolidated loan is less than the average of the multiple debts. Consolidation means you do not have to remember when your various repayments are due - you will only have one.

The advantages can be sumarised as follows:

* reduced monthly outgoings
* just 1 repayment per month making your debt easier to manage
* a choice of flexible repayment options (see below)
* a cheaper interest rate for the one loan

Types of loans

There are many types of loans available that may suit your needs. Make an appointment with the manager of your bank or building society to discuss the options available to you. Flexible plans allow for repayments to be made of a fixed period of time - say 10 to 30 years. Thus you can choose a loan that best suits your circumstances. Examples of plans include:

* The standard loan plan
* The graduated loan plan - this type of loan allows gradual increase in repayments as your earning power increases
* The variable loan plan - the repayments adjust depending on your income
* The flexible loan plan - cost more, but covers you if you are unemployed or ill for any period of time

Loan providers

Specialist companies exist that refinance student loans. Loans can also be obtained from banks or building societies. If you are thinking of consolidating your debts into one loan, make sure you research the various loan providers and pay particular attention to their rates of interest.

Cons?

There are no cons really. You are far better off with one debt, from one sources that has been tailored to meet your repayment abilities.

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