CONSOLIDATION: A Strategic Alliance

2007-03-08 10:33:40

( Financial )



In this world, loans and debts are universal. In our society, they belong in the natural order of things. Because of the necessity of borrowing, loan or debt consolidation has become common fixtures in our financial lives.

TYPES OF CONSOLIDATION

Financial consolidation takes many forms, but what they basically do is collate your loans into a single unit so that you will pay all your debts at one time every month; therefore, instead if having to manage multiple payments month after month, you only have to concern yourself with one. Usually, consolidation companies haggle for lesser interest to help you handle the payments. They mediate with the lending companies in your behalf in exchange for guaranteed payments every month.

One type of loan consolidation worth mentioning is the student loan consolidation. This is a big help to graduates who need a fresh start as they enter the labor force. Student loan consolidation, also known as college loan consolidation, is for those whose main concern is paying off their student loan early on. These companies consolidate student loans and facilitate easy payment terms; that way graduates are not burdened by debts as they start to build their careers.

WIN-WIN

There is also the federal student loan consolidation, where the government subsidizes the companies providing the consolidation service. The students do not pay the company to consolidate their debts. Instead, the federal government pays these consolidation companies for helping them receive payments for the student loans they have given. Under the federal student loan consolidation system, the graduate gets a clean slate, the government receives the payments due them, and the consolidation company receives subsidies. The federal student loan consolidation is actually a compromise where everybody wins.

To others, consolidation is a desperate attempt to prevent bankruptcy. The stigma attached to the word is largely due to the fact that consolidation is often taken as a last resort. But that need not be the case; consolidation should not be seen as a last ditch effort but a strategic move to better manage your finances.


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