YES, there could be.
Consolidation is used as a debt management tool and is ideal for those who are having difficulty making their monthly payments. It is designed to extend out your loan terms and minimize your monthly payment. Because of the additional years, consolidation may significantly increase the total cost of repaying the loan due to the additional amount of interest which will accrue.
Another possible disadvantage is you may lose out on borrower benefits such as interest discounts and rebates that your current lender provides. Many consolidation lenders do not offer these benefits.
And finally, you may hit the consolidation market at the wrong time. If you happen to consolidate your federal loans when the interest rate is high than you are stuck with that rate. You can not consolidate your loans again at a later date should the interest rate drop. You are stuck with the rate at the time of your consolidation. It is not like refinancing a mortgage where you can refi an infinite amount of times to try and score the best interest rate.
By David E. Bonvie
No comments:
Post a Comment