Consolidating your student loans is an important financial decision. You want to make sure that you are picking a reputable lender. Since there are a variety of banks and companies who offer consolidation services, your decision will not necessarily be an easy task. On the surface, each of these organizations seems to offer the same services. The deeper you dig, the more you will find out how different they truly are.
People understandably get caught up in how much they can lower their monthly payment. Company A says they can slash your monthly payments by 25% while Company B says they can slash your payments by 40%. If you just look at that one factor, your decision would be easy. You would pick Company B, but there is so much more that needs to goes into your decision-making process.
We would all like to assume that every business that opens its doors is reputable. Unfortunately, that is not always the case. There are plenty of companies willing to prey on people who want to consolidate their student loans. These companies are willing to offer lower monthly payments in exchange for fees, hidden charges, and poor, or no, service. It is up to you to do the leg-work necessary to make sure the lender you use is reputable. It will take you some time, but it is time well-spent. Remember, you often have just one opportunity to go through the student loan consolidation process.
So, how do you know if a lender is reputable? If you walked into a bank, the banker (of course) would praise the institution’s reputation and tell you why they should be your only choice. If you asked your best friend, she might have an opinion, but she probably isn’t an expert in the field. Here are a few tips to help you uncover how reputable a lender truly is:
- Research – If you were thinking about refinancing your home loan, you would research a few different financial institutions. You should do the same when deciding who should consolidate your student loans. Examine the financial stability of these companies. You can easily find this information on the Internet. If the company is shaky, what would happen to your loan portfolio? Read up on their business practices. Have there been numerous customer complaints, or have they won awards for their customer service? Nowadays, it seems like everyone is willing to share their opinion. Do an Internet search on the company name, and read customer reviews. Do not let one bad review sway you. Look at a variety of those reviews to get an overall feel for the typical customer’s experience.
- Do They Listen? – A reputable lender will listen as you talk about your financial situation and then suggest possible solutions. A red flag needs to go up if they start suggesting different payment plans without even listening or asking questions about why you want to consolidate. One size does not fit all in these situations. The lender needs to show that he understands your situation, and is willing to work with you and find solutions that best fit you and not his company. Pay attention to their reaction when you ask questions. A reputable lender should be more than willing to address any of your concerns. If they don’t want to discuss these concerns during the consultation, they won’t want to discuss them once you become a customer.
- High Pressure – You should never feel pressured to make this important financial decision right on the spot. It is fine for a lender to tell you the interest rates may change slightly if you wait a few days to make a decision. However, they should understand that you want some time to consider the implications of this financial decision. High pressure indicates that a lender cares more about making a sale and his bottom line than your financial future.