You need not be finance-savvy to realize that you can save a substantial sum of money with lower interest rate on your student loan consolidation loans. By applying the knowledge of basic math, you can work out how much you can save with every 1/8th or 1/10th percent reduction in the interest rate. Remember that "A Penny saved is a Penny earned". Likewise, any amount of money saved, be it small or substantial, can make a significant difference to a person especially to the students. Therefore, it is very important for you to look out for the lowest Student Loan Consolidation Rate as well as for the best company that gives a lower interest rate.
Essentially speaking, fixed and variable rate are two types of rates for Student Loan Consolidation Comparison. Few of the Loan Consolidation Companies may offer a combination of rates with certain percentage as fixed component and rest of the component as a variable component.
In fixed rate loan, as the name suggests, you will pay the interest at the same rate during the tenure of the loan. Rates for fixed rate loan depend upon the overall economic indicators of any nation. Inflation is the primary factor that has a direct bearing to Student Loan Consolidation Rate. You must read and understand clearly the fine prints in the loan agreement, as during certain specific conditions, banks reserve the right to modify the interest rates of your loan. Defaults in loan repayments falls under such specific conditions written on the agreement.
Rates of variable rate loans change as per the prevailing economic conditions of the country or nation. Interest rates of variable rate loans are directly proportional to the interest rates in the present economy. Higher the prime rate, higher the Student Loan Consolidation Rate and vice versa. Student Loan Consolidation Companies may follow different benchmark rates like L.I.B.O.R. (London Inter-bank Offer rate) dollar rates or Prime interest rates. Make sure to understand this aspect very clearly before making any decision, if you have decided to go for variable Student Loan Consolidation Rate.
Choice of fixed vs variable can vary with the current economic conditions of your country. Ultimately, you will decide what type of loan is suitable for you. You need to think a hundred times before making any decision. Evaluate you financial status and consider questions that are necessary in making a final decision, such as: how many years i will able to pay the debt? What are the benefits that I can get from that company when I consolidate my loan to them?