Loan Consolidation?

[Strazos]

I would have preferred to put this in quick tech questions, but alas....

Anyway, I really need to consolidate. It'd be nice to get the amount of cash flying out the door for school loans to come down a bit. I don't even care if I end up stretching out the terms more.

Anyway, I have my Fed loans, and Sallie Mae.

Any tips, ideas, or advice? Any particular lender programs anyone would recommend, or what sort of terms I should be looking for? Any pitfalls I should be looking for?

EDIT: Wow, I'm a fucking tard tonight - Please move to General, please mods. thanks.

[schild]

Moving to gen disc.

[SnakeCharmer]

Am I right to assume this is for school loans?  If so, I'm surprised you hadn't received offers consolidate it 6 months ago (unless you just graduated). 

Edit'd cause I'm the tard and re-read it...

Stretching them out is no big deal.  Gives you some extra leeway in case you have some financial difficulties every so often.  Also, the interest is tax deductable, so that's no real biggie.  That said, you'd still save money long term by paying off early.  Anyway, one of the guys in my office is going through the same thing with his wife.  I'll ask him tomorrow what he did or is planning on doing.  I *think* it might be a big tough these days since lenders haven't gotten so stingy with loans.

[Strazos]

I use to get shit from Chase and Nelnet and such in the mail all the time, but I just felt like I couldn't trust them...

But now, I really want to get a new car soon if I end up sticking around and needing one. I can handle a cheap car/insurance, but only if I can get my school loan monthly obligations down a bit.

[Murgos]

Is there a reason you wouldn't use the federal loan consolidation program?

https://loanconsolidation.ed.gov/appentry/appindex.html

It's what I used.

[SnakeCharmer]

That's what my buddy's wife is using.  Seems happy with it, I suppose.

[Hawkbit]

Talk to a credit counselor. 

Be very careful how you consolidate.  By using a different bank/service than the federal loan consolidation program for student loans, you likely change that debt from unsecured to secured.  Which means if you ever default on the loan payment for a significant period they can come after your house and other property as collateral.  As a rule of thumb, consolidate secured debt together in one transaction and unsecured in another. 

Both my wife and I left our student loans unsecured.  In the event one of us can no longer pay back the loan (or if one of us dies), by leaving the debt unsecured they cannot come to the other to attempt to collect the debt.  Seeing how her student loans from law school were nearly $100,000, there's no way I could ever try to pay that back on a librarian's salary.  In case she dies, I'd prefer to let the public eat the debt instead of either either living destitute for life or eating a 9mm.   

http://en.wikipedia.org/wiki/Unsecured_debt
http://en.wikipedia.org/wiki/Secured_loan
http://en.wikipedia.org/wiki/Debt_consolidation

Quite often, debt consolidation of loans other than student loans can look unfavorably to lenders, even though it may not directly affect your credit score.

I consolidated my student loans through Direct Loans last year.  Watch how the market/interest rates are looking.  If you're only consolidating school loans, call up Direct Loan's consolidation group in June and see what they're estimating the interest rate to change to on July 1st.  That's the date that the interest rates for them changes, once for the whole year.  If they're estimating the rate to drop, wait till July 1st.  If they're expecting an increase, do it in June. 

That's about all I got, good luck man... but call a credit counselor.  (not one attached to lending company)

[Montague]

I was in the same boat as you last year, loans under both DSL and Sallie Mae. Consolidated all my loans under Direct Student Loans, reduced my interest rate about 2.5% and cut my payments in half. I opted to extend the loan out a bit but at how low the interest rate was I don't regret it.

[Abagadro]

Back when I had it I consolidated my debt with Sallie Mae. I'd stick with government or quasi-government lenders as you will get the best terms.

[slog]

the interest on Student loans is tax deductable.  if you refi them into non student loans, you will lose that.

[Murgos]

the interest on Student loans is tax deductable.  if you refi them into non student loans, you will lose that.

If you use the link I posted they stay student loans.  That is, if the loans you are consolidating qualify (Stafford and Federal Direct and some others, there is a list).

[Strazos]

Thanks for the info folks; much appreciated. I'll have to look into actually doing this in a few weeks (vacation coming up).


Would it be advisable to go get my yearly free credit reports and have them cleaned up before applying for something like this?

[Paelos]

Speaking from the CPA side, what you owe, when you owe it, and your income situation can also have massive tax consequences that should be considered. My advice would be to talk to a public accountant to help you. They can also assess your total financial situation.

[Yoru]

Since I noticed you mentioned Nelnet... those fuckers purchased one of my student loans from the original lender shortly after I graduated. I'd seriously recommend against using them for anything, ever.

They tended to send statements late, needing a one-day or two-day turnaround to avoid late fees/penalty rates, and they jacked the variable rate up every time someone at the Fed had a bad burrito. Once I got on their e-pay program, they still sent statements late, but at least I was clear of potential late fees. They also had the highest interest rate over all my loans.

I paid them off first, just to make sure those bastards never got another penny out of me. Steer clear.

[Strazos]

Speaking from the CPA side, what you owe, when you owe it, and your income situation can also have massive tax consequences that should be considered. My advice would be to talk to a public accountant to help you. They can also assess your total financial situation.

Don't know any, and certainly don't have the money to pay for a tax professional.

[Paelos]

Speaking from the CPA side, what you owe, when you owe it, and your income situation can also have massive tax consequences that should be considered. My advice would be to talk to a public accountant to help you. They can also assess your total financial situation.

Don't know any, and certainly don't have the money to pay for a tax professional.

It depends highly on your situation if it's a good investment. Also, you have to ask the question of why you are consolidating. Is it mostly student loans, or are you running debt on other items that were from overspending? If it's the latter, you can end up with a drawn out consolidation payment and more debt as you keep racking it up on the credit cards in the future. Then again, many consolidators force you to cancel all credit card accounts anyway, so it may be a wash. Certainly the plus side is getting a lower interest rate than the current debt.

[Strazos]

Well, I can afford to pay the bills I have right now, which for these purposes consist mostly of CC payments and school loans.

I want a new car. If I can consolidate my school loans and get the payments down by about a third, that will make getting a new car much, much easier.

Pretty sure, I don't need to mess with my CCs to do that, right?

[SnakeCharmer]

/Stewie - Whooooooooooooooa.

New new car?  'New' used car?  Want or need?

If you're fresh out of school, the absolute worst thing you can do is buy a new car.  Hell, even buying a used car that you have to finance is a bad idea.  Anyway, the reason I ask is, if you have a car that's paid for, drive it for a while.  Use the money you'd normally put towards a car payment (300 plus?) to your credit cards and student loans - primarily your credit cards.  Fastest way to start earning yourself ~20 percent on your money is to quit giving it to the credit card companies.  Even if they're low interest, pay those fuckers off.

Also, I've heard, and have nothing to back this up but heresay, that dealers won't give you the time of day without a 750 or higher credit score.  They're going to pound you in the ass on the trade in of your existing car, and probably require you to have at least 10 percent down payment.

All that said, if you're having to consolidate school loans to get your payment to where you can afford a new/new used car, you're cutting it too close to begin with.  Really, I'd honestly strongly advise you to put the new car wishes on the back burner until you get some outstanding debt paid for.  Get out from underneath it as fast as you can.  Raman noodles, the whole 9 yards.  Live like a poor college student for the next couple of years.  I know that it sucks, but long term, it's the absolute best thing for you.

[Venkman]

I want a new car. If I can consolidate my school loans and get the payments down by about a third, that will make getting a new car much, much easier.

If it's an emotional "I want", it's not worth it. You'd be better off just spending $15/mo on an MMO to get the same amount of fun-per-day as a car that mostly sits unused would give you.

But I was 20-something once too, and fresh into the private sector on my own first salary, I couldn't talk myself out of that new(ish) car then either . Nowadays though I wish I had learned debt management then instead of spending big on crap that has absolutely no return on investment at all. Instead, I'm driving a car now that was new when I got that first salary and hoping it lasts me until my youngest is out of preschool and/or my refi goes through

[Hawkbit]

The whole point of consolidating is to get your debt into a manageable situation.  If you're putting your debt together so you can borrow more, you're doing it wrong.  Entirely. 

The first thing a CPA/Credit Counselor is going to tell you is that consolidation only works as long as you're not going to add more debt.  Seriously. 

I hate to go all 'mom n dad' on you, but it really sounds like you're heading down a bad path.  Especially in these less than stellar economic times. 

[Sky]

I waited until I was almost 40 before buying a new vehicle and I'm in a pretty good financial situation (assuming the sky doesn't fall). And if things were any tighter, I would've gone used just as easily. If you've got a debt load, get rid of that before taking on a new car, which is a horrid investment.

Like DQ, the only lining on that cloud is that I intend to have this truck for decades...

I also want to know what kind of crappy rice burner SC is driving for 300/mo :)

[SnakeCharmer]

Haha, no rice burner for me!  Good ol' American V8's (and a German V6) are all that's in my garage.  And they were bought used.  Besides, you know I'm far too narcissistic for anything less.

But I was figuring a 20K car with 2500 down, at 5 percent interest for 5 years.  Looking it up, it's right at 330, so I was close.  Close enough for horseshoes and hand grenades anyway.

[Merusk]

I only spent $13k on my "new" (used) car with less than 25k miles and I still feel like it was a decadent decision to blow $295 a month on it.

Yeah, Straz, it's really much, much, MUCH better to consolodate so you can get the smaller/ month payment and continue to pay the same amount.  I'll have paid off everything I owe to everyone except student loans by next February, (or sooner, depending on my taxes) Even though the last 4 years have sucked in terms of impulse buying, knowing I'll have $700 a month to save AND that my family can live relatively comfortably without that money is a huge chunk of peace of mind.

[Murgos]

I'll have paid off everything I owe to everyone except student loans by next February, (or sooner, depending on my taxes) Even though the last 4 years have sucked in terms of impulse buying, knowing I'll have $700 a month to save AND that my family can live relatively comfortably without that money is a huge chunk of peace of mind.

My consolidated student loan interest rate is 3.65%  There is no reason to pay that off early.

[SnakeCharmer]

You mean other than to not have that debt hanging over your head?

[Murgos]

You mean other than to not have that debt hanging over your head?

Because my money makes more money not paying off that debt?

Having debt isn't evil.

Edit: Let me put it this way so it's clear.  Not paying off that loan early is worth 50,000 dollars.

[Sky]

Financial experts ( ) are actually saying that paying off low-interest stuff is actually a good idea now, because you'll earn more ditching even low interest than you would investing. Not sure where the cutoff is for that in general, but it's kinda bleak. By paying off your loan early, Murgos, well, there's an investment that earns 3.65%...and the stock market is losing and looking damned unhealthy.

[SnakeCharmer]

I hate debt.  The fact that my house is, in its own right, a debt absolutely makes my skin crawl.  If I charge an online purchase to my CC, I absolutely positively HAVE to pay it off immediately after.  I'm fairly certain I'm probably OCD about it.  

[Nebu]

Financial experts ( ) are actually saying that paying off low-interest stuff is actually a good idea now, because you'll earn more ditching even low interest than you would investing. Not sure where the cutoff is for that in general, but it's kinda bleak. By paying off your loan early, Murgos, well, there's an investment that earns 3.65%...and the stock market is losing and looking damned unhealthy.

Now may be a good time to get some financial advice.  I just wish to god that I could get out from under my 100k student loan debt at 7%.   I consolidated it like 10 years ago when 7% was a bargain and noone will let me re-consolidate due to some crazy old law from the Kennedy administration.

[Lantyssa]

I hate debt.  The fact that my house is, in its own right, a debt absolutely makes my skin crawl.  If I charge an online purchase to my CC, I absolutely positively HAVE to pay it off immediately after.  I'm fairly certain I'm probably OCD about it. 

I can wait to pay it off at the end of the month, however the thought of carrying a balance makes me ill.  I have not done so since college when I simply didn't make enough to pay for a computer in one month.

My condo was a 30 year mortgage but I was making payments to get it paid off in 15.  I hate carrying debt, and what I have right now is giving me ulcers.  So I'm with you.

[Strazos]

The only reason I want a new damn car is that I feel like my car is just becoming more and more unreliable; at this point, I'm waiting for something truly catastrophic to happen to it. And if that happens, I'll have to get a new car Anyway, AND do it without a decent trade-in.

And really, it seems this car is really contributing to my debt...seems like every time I'm about to pay off one of my CCs, something happens and I have to dump a repair back onto that card.

[SnakeCharmer]

Cheap set of tools, a set of jack stands / ramps, and a Haynes Repair Manual is your best friend.  Pretty much anything external (alternator, water pump, brakes, etc) can be done in your driveway.  DIY vehicle repair really isn't that hard.  Then again, I started working on cars/trucks/etc when I was 12.  And I freak out when building a computer.

Make/model of car?  Mileage?  Do you have 10 percent to put down on the new car?  Remember, the dealer is going to give you jackshit for your vehicle, so, there's that.  Sell it if at all possible (if you've convinced yourself of the fact you must have a new / new used car).  New car payment is going to run you 300-400 bucks a month.  That's a lot of repairs on your existing vehicle.  Check your credit, as well.  Find out what your beacon score is.

I think, at most, you're going to save 50 bucks a month by consolidating your student loans, to be honest.  I'd be very interested in what you're actual savings are once you get the terms.

[Paelos]

I'm glad I asked the question. Strazos, it sounds like you might want to look into your total debt situation before you consolidate. I think there might be better options given that you'd have to get rid of CC's.

[Strazos]

I'd really like to know what a better option would be. Seriously.

And SC, I'm all for DIY repair when it's feasible. The problem is knowing what the problem is First. A few tools and a manual is nice and all, if you actually know what the problem is. I'm not a mechanic, so diagnosis can be a huge bitch, not to mention that I'd have to make my own ramps to get under the stupid front end of the car.  (also, make/model = 01 v6 Mustang, about 96k miles. Don't bother blue booking the car, because this particular model isn't in there.)

EDIT: Sorry, don't mean to come off as whiny...I hate bills. Cars too. And the waiting for possible job selections to come back.

[SnakeCharmer]

Hah.  A Mustang.  Which is where my screen name came from (have owned somewhere in the neighborhood of 10 of the bitches, most of them Cobras - hence Snakecharmer since I was usually fixing or mod'ing the shit out of them).   Easy easy to work on. The basics of the car itself date back to the '77 Ford Fairmont (seriously).  Parts are dirt dirt dirt cheap, and they really are easy to work on.  If you start getting CEL's (check engine light), take it to the nearest Autozone or ORiely's.  They can pull the codes for you - and tell you whats wrong, or you can look it up on the web.  There's some seriously good Mustang websites out there with all sorts of knowledge.  Trade-in, without looking, is probably around 2400 bucks.  Only thing special about it would be dealer installed stuff like graphics or wheels, or anything you did yourself.  There's really not much to them, unless you're talking about a SVT model, which we're not.  So no worries there. 

I can probably tell you whats wrong and how to fix it via PM or instant message.  Honestly, I know those cars like the back of my hand.  So, unless you've been doing 2nd gear burnouts from redline, the tranny should be fine and the motor is actually pretty bullet proof.  Same goes for the brakes - if you're one of those drivers that waits until the very last minute to stop and slam on the brakes causing the rotors to rapidly heat up and cool down (warping them) or if you wait too long between changing the front pads / rear drums and it eats into the rotors/drums, they should be fine as well.  I know the V8's inside and out, but the V6 is a really easy engine to work on.  There are some sensors that are prone to failure that a mechanic or dealer will want to charge you an arm and leg for to change, but you can honestly fix them (electronics parts clearner) or replace them yourself inside of 5 minutes. 

Tell me what's going on with it, and I'll tell you how to fix it.