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Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.

Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as collateral, which is most commonly a house (in this case a mortgage is secured against the house.) The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale (foreclosure) of the asset in order to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower.

Because of the theoretical advantage that debt consolidation offers a consumer that has high interest debt balances, companies can take advantage of that benefit of refinancing to charge very high fees in the debt consolidation loan. Sometimes these fees are near the state maximum for mortgage fees. In addition, some unscrupulous companies will knowingly wait until a client has backed themselves into a corner and must refinance in order to consolidate and pay off bills that they are behind on the payments. If the client does not refinance they may lose their house, so they are willing to pay any allowable fee to complete the debt consolidation. In some cases the situation is that the client does not have enough time to shop for another lender with lower fees and may not even be fully aware of them. This practice is known as predatory lending. Certainly many, if not most, debt consolidation transactions do not involve predatory lending.

What is a Federal Student Consolidation Loan?

A Federal Consolidation Loan is a loan that you can use to pay off all or a portion of your original eligible federal student loans. You combine (consolidate) your existing federal student loan debt into one new loan.

What are the terms of a Federal Consolidation Loan?

o The interest rate on a Federal Consolidation Loan is fixed, meaning it will not change over the life of the loan, even if the interest rates on other federal loans go up (or down).

o The interest rate is calculated from the weighted average of the interest rates of your
existing loans, rounded up to the nearest 0.125%, with a cap of 8.25%.

o There are no fees to apply for or receive a Federal Consolidation Loan.

o The repayment term is up to 30 years, depending on the total amount of your student loan debt, and there is no pre-payment penalty.

Why should you consider consolidation?

With a Federal Consolidation Loan, you can benefit from:

o Lower monthly payments

o Fixed interest rates

o Only one payment for your federal loans each month

o New or renewed deferments

Because you are allowed up to 30 years to repay your loan, your monthly payment can be significantly lower with a consolidation loan, although you may pay more in total interest over the life of your loan.

When should you consolidate?

Only loans that are in grace, deferment, forbearance, or repayment can be consolidated into a Federal Consolidation Loan. Loans that have an in-school status cannot be consolidated.

There are no deadlines. However, Federal Stafford Loans that are in the grace period (or in deferment) have the lower rate compared to loans in repayment (or forbearance). Because the current interest rate is used in the calculation to determine the weighted, fixed interest rate of your consolidation loan, you will save money over the long run if you consolidate while in your grace period or while in deferment. (If you choose to consolidate while in your grace period, keep in mind that your grace period will be cancelled when the consolidation loan is issued and you will begin repayment.)

Student loan consolidation

In the United States, federal student loans are consolidated somewhat differently, as federal student loans are guaranteed by the U.S. government. In a federal student loan consolidation, existing loans are purchased and closed by a loan consolidation company or by the Department of Education (depending on what type of federal student loan the borrower holds). Interest rates for the consolidation are based on that year’s student loan rate, which is in turn based on the 91-day Treasury bill rate at the last auction in May of each calendar year.

Student loan rates can fluctuate from the current low of 4.70% to a maximum of 8.25% for federal Stafford loans, 9% for PLUS loans. The current consolidation program allows students to consolidate once with a private lender, and reconsolidate again only with the Department of Education. Once the student has consolidated their loans, the loans are set to a fixed rate based on the year they consolidated; reconsolidating does not change that rate.

Federal student loan consolidation is often referred to as refinancing, which is incorrect because the loan rates are not changed, merely locked in. Unlike private secton debt consolidation, student loan consolidation does not incur any fees for the borrower; private companies make money on student loan consolidation by reaping subsidies from the federal government.

Student loan consolidation can be beneficial to students’ credit rating, but it’s important to note that not all federal student loan consolidation companies report their loans to all credit bureaus; SLM Corporation (formerly Sallie Mae) does not report to Experian or Transunion, which means that students will have differing credit scores at Equifax, Transunion, and Experian.

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Life insurance settlement or Federal Student Loan Consolidation

Author: Masha Cutikk
Article Source: EzineArticles.com
Canada duty

Loans are a large part of the American economy from the loan institutions to the individuals who receive loan approvals. Loans provide consumers and businesses with financial clout to purchase or take financial risks with money that they do not yet actually have in their possession. Loan institutions encourage the entrepreneurial spirit that has made the US an economic powerhouse over the years. Even with the negative repercussions that can come out of misused or miscalculated loans, loans also play a pivotal role in the nation’s economy.

For most households, it is virtually impossible to own a home unless a mortgage loan can be received to buy a house. Typical American households do not have the existing cash to pay for a home upfront and need the financial industry to prepay for their homes while they repay a loan with interest to a bank or mortgage company that approves their application. While even the most conservative financial management specialists agree that a mortgage loan is a reasonable commitment for most families, they also discourage other loan practices that can sink consumers. Most financial specialists generally agree that loans such as payday loans and cash advance loans should only be used in the most extreme of circumstances and only received if a consumer is able to pay back without rolling the loan over.

The interest rates for payday loans and cash advance loans are exorbitant and can be over 300% APR for an initial loan. There are, however, times that some consumers may be forced to consider one of these loans. In these cases, it is best to compare rates, services and charges in order to receive the best temporary loan for the money. If at all possible, try other avenues of financial help before resorting to these high interest rate loans. You may find that you can get a small loan from your credit union, a family member or a community organization that may offer small loans for extreme circumstances.

Of course, good money management techniques such as budgeting and savings provide more long term relief from those times that some unexpected circumstance saps your weekly earnings. It is always wise to attempt to set up an emergency fund of at least $1,000 that is not touched for any reason other than an extreme situation. If you car breaks down, your washing machine tears up or your child has an unexpected illness, an emergency fund can help you through some of the moderately difficult circumstances of life. Always make sure to replenish your emergency fund as soon as possible in order to be prepared for the next inevitable crisis.

Payday and cash advance loans are generally not received in large loan amounts as are unsecured or secured personal loans. Personal loans can be used for a variety of reasons such as debt consolidation, mortgages, car loans, student education or home improvements. An unsecured personal loan can be approved for varying amounts depending on several consumer variables. An unsecured personal loan is not approved based on collateral but is based on credit history and income to debt ratio. Although it is possible to receive a bad credit loan, most substantial unsecured loans are approved on the basis of credit history and earnings. It is important to keep a good credit score in order to receive substantial loans. For consumers that have scores over 700, it is relatively easy to pick and choose your lending institution.

Such habits as paying bills on time, developing a positive long range credit history with credit cards and showing a few major payoffs such as mortgages go a long way in securing the best credit scores. A positive debt to income ratio is important as well in receiving an unsecured loan and it assures the lending institution that you are not in over your head financially if your earnings far exceed your monthly expenditures. For those who have good credit, secured loans are very easy to obtain especially since valued collateral is required as surety against the loan. Lending institutions that approve secured loans are relatively sure they will have little risk in receiving their loan amount through your collateral even if you default.

Another common type of loan that many Americans assume at one time or other in their lives is a student loan. These loans make it possible for students to meet the cost of higher education whether they are just out of high school or are mature students who want to further their education later in life. There are many types of student loans available to anyone including federally subsidized loans or student loans without subsidization. Generally, federally subsidized loans require less interest at pay back time than do regular student loans through other financial institutions.

Whether it is a student loan, personal loan or any other type of loan, it is possible to receive a loan in almost any circumstance provided you are an American citizen and can prove your intention of repayment to the loan institution. Approving loans is important business for banks and other lending institutions, but just as equally important for Americans who need advance cash on the money they intend to earn over a lifetime, so that they can purchase homes and other expensive family necessities while they are young enough to enjoy them. “But seek ye first the kingdom of God, and his righteousness; and all these things shall be added unto you.” (Matthew 6:33)

Author: Christian N
Article Source: EzineArticles.com
Excise Tax

In a vote last month that fell for the most part along party lines, the House Financial Services Committee approved the creation of a Consumer Financial Protection Agency, which will expand federal oversight of nonfederal private student loans. At the same time, the committee rejected a proposal that would have included school-sponsored “gap loans” under the authority of the new CFPA.

 

The House panel, in a vote of 39 to 29, approved the Consumer Financial Protection Agency Act of 2009 (H.R. 3126), a centerpiece of the Obama administration’s pursuit to overhaul the nation’s financial regulatory system.

 

The approved legislation would create a new federal agency, the CFPA, which would have centralized oversight of various forms of consumer credit, such as mortgages and credit cards, as well as private student loans.

 

 

The New Consumer Financial Protection Agency

 

The CFPA would have the authority to write new consumer lending protection rules, monitor financial institutions for compliance with these rules, and penalize institutions for any infractions. The CFPA would also have the ability to ban products, marketing tactics, and other business practices that it deems “unfair, deceptive, or abusive.”

 

“The Consumer Financial Protection Agency will prevent predatory lending practices and other abuses and will ensure that consumers get clear information they can understand about financial products like credit cards and mortgages,” President Obama said in a commendation of the House committee’s approval of the bill.

The measure passed despite strong Republican opposition and forceful lobbying from banks and business groups.

“It’s not about protecting consumers; it’s about a new government bureaucracy making decisions for us,” said Representative Spencer Bachus of Alabama, the ranking Republican on the House panel.

 

 

Consumer Groups Back Oversight of Private Student Loans

 

A number of student and consumer advocacy groups had been urging the House committee to approve bringing the CFPA’s oversight to private student loans — non-federally guaranteed education loans issued by banks and private lenders rather than by the U.S. Department of Education.

 

Until this year, when private student lenders have been forced to make their credit requirements much more stringent in response to skittish investors and a risk-averse credit market, private student loans had been steadily attracting more and more borrowers as families struggled to meet ever-rising college costs.

 

“Private student loans are one of the riskiest ways to pay for college, yet a growing number of students have private student loans as well as, or instead of, federal student loans,” a coalition of student and consumer groups wrote in a joint letter to Representative Barney Frank, the Democratic chairman of the House Financial Services Committee.

 

“Private student loans are expensive, mostly variable-rate loans that cost more for those who can least afford them,” the letter reads. “They lack the fixed rates, consumer protections and flexible repayment options of federal student loans, and are not financial aid any more than a credit card is when used to pay for textbooks or tuition.”

 

 

The Fight for Regulation of ‘Gap Loans’

 

In their letter to Frank, the consumer and student advocate groups also pressed for a legislated clarification that school-sponsored “gap loans” wouldn’t be exempted from the CFPA’s oversight.

 

“Gap” student loans — so-called because they’re intended to cover students’ financing gaps, any attendance costs that aren’t covered by other financial aid such as grants and federal student loans — are increasingly being offered by for-profit colleges and vocational schools to boost enrollment as these institutions encounter a growing flood of unemployed and low-income students looking to return to school.

 

For-profit schools that provide gap financing, say that their financing programs allow students to attend school who wouldn’t otherwise be able to afford a higher education.

 

But these gap financing programs are risky and expensive for students, consumer advocates maintain. Gap loans typically carry high interest rates and large monthly payments that the schools’ generally low-income students often aren’t able to handle — all while allowing the schools to collect hundreds of thousands of dollars in federal money from the federal financial aid that students use to pay the bulk of their attendance costs.

 

Concerned about the potential for student loans made by for-profit schools to be exempted from the CFPA legislation under a small-business clause in the bill, consumer and student advocate groups had been lobbying in support of an amendment, sponsored by Democratic Representative Maxine Waters of California, that would have specifically placed gap loans under the authority of the CFPA.

 

“We just want to make sure that the risky financial products that some colleges, for-profits in particular, have been making to students are still covered by this agency,” said Lauren Asher, president of The Institute for College Access & Success.

 

Proprietary colleges argued against the proposed amendment, saying that gap student loans are already regulated by the federal Truth in Lending Act. New TILA rules, mandated under last year’s Higher Education Opportunity Act (H.R. 4137) and which will go into effect in February, will require student lenders to disclose more details about their private loan programs, including interest rates and estimated monthly payments, and to inform applicants for private student loans about federal student loan options.

 

Consumer advocates, however, hold that TILA regulations aren’t sufficient and that the stricter oversight of the CFPA is necessary in order to protect student loan borrowers.

 

“To effectively protect consumers, the CFPA must have full authority to regulate private student loans regardless of the institution offering them,” the consumer and student advocate groups wrote in their letter to Frank. “For consumers, a private student loan can pose the same serious risks whether issued by a financial institution or by a school. The CFPA should apply and enforce standards based upon the product and not the issuing institution.”

Jeff Mictabor is an enthusiast on the topic of student loan issues in the news. He has been writing for the past 10 years for a variety of education publications. He now offers his writing services on a freelance basis.

Article Source:http://www.articlesbase.com/loans-articles/expanding-federal-regulation-of-private-student-loans-1456931.html

CitiAssist Loans

Most of the larger banks and some of the smaller private lending institutions offer various forms and options of both federal and private student loans. Citibank student loans are available under the CitiAssist Loan program, which provides a wide range of student loans for undergraduate, graduate, law and health professions and residency loans. Each of these Citibank student loans is designed to provide funding to students in different types of academic settings with qualifying requirements and either a co-signer or a good, solid credit score.

Understanding the different options with Citibank student loans requires both a good understanding of your future academic and career goals as well as a knowledge of you projected current and future income for setting realistic repayment options and deferment dates for the loan. The different Citibank student loans include:

1. * Undergraduate loans – to qualify for an undergraduate loan the student must be eligible for enrollment at least part-time at a fully accredited college or university as well as be at least 18 years of age and have a United States citizen as a co-signer if necessary. The co-signer as well as the student must have a valid US social security number. There are no minimum loan amounts and no maximum loan amounts, although the school will provide the cost of tuition, then any other financial aid already granted will be subtracted, leaving the total maximum amount of the loan.

2. * Graduate Loans – graduate Citibank student loans have the same requirements as the undergraduate loans as well as the same freedom of minimum and maximum amounts to borrow. Since many graduate students will already have established a credit rating and score a co-signer is less common on a graduate loan. The loan payments do not start until 6 months from graduation provided you are still enrolled as at least a part-time student.
3. * Law and Bar Study Loans – these loans are designed specifically for law students that are attending a fully accredited law school in the United States. There are some limits on these loans such as a lifetime $15,000 limit on the bar study loan option. In addition the grace period before the loan repayment starts is extended to 9 months.
4. * Health Professions and Residency – these loans are designed for students that are enrolled or are planning to enroll in any of the following courses of study: allopathic, dentistry, optometry, osteopathic, pharmacy, podiatry or veterinary. Residency students will need to be in at least their second year. There is also a nine month grace period for this loan option. Choosing Citibank student loans offers flexibility and options that other lenders may not provide. Talking to a Citibank financial advisor can help in deciding which one of the loans most closely meets your educational finance needs.

Article by –> http://citibanks-student-loans.blogspot.com

More About Citibank Loans –> citibanks-student-loans.blogspot.com

Article Source:http://www.articlesbase.com/banking-articles/citiassist-loans-1316245.html