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By Homer Molina

 Every year, student loan interest rates are reconfigured on July 1st. In recent years, this date has come and gone with no cause for alarm, but this year is different. As part of a plan to heal the nation’s $40 billion budget deficit, the Senate passed a plan to cut $12.7 billion from the federal student loan program between 2006 and 2011. The impact on students is a drastic interest rate hike on all federal student loans including the Stafford loan, the PLUS loan, the Consolidation loan, and the Perkins loan.

1. Student loan interest rate hike

After July 1st, the interest rate on new Federal Stafford loans will jump from a variable 4.7 percent to a fixed 6.8 percent while PLUS loans will increase from a variable 6.1 percent to a fixed 8.5 percent. The way to avoid these skyrocketing interest rates is to lock into today’s low fixed rate by consolidating your loans.

2. Last chance for “in school” consolidations

Under the new legislation, students that are still in school won’t be able to consolidate their loans after July 1st, 2006. It’s more important than ever for current students and those who are in their post-graduation grace period to seize this current window of opportunity to refinance and lock in the current rate before July 1st.

3. The 1st of July means the end of spousal consolidations

Another student loan consolidating restriction will be imposed on the spousal consolidation loan. For years, married couples have enjoyed the simplicity and financial benefits of consolidating their student loan payments. Married couples still have the chance to take advantage of this opportunity by applying for a spousal consolidation loan before July 1st.

4. You’re stuck with your lender

Starting on July 1st, borrowers will no longer have the opportunity to consolidate existing Consolidation loans with a different lender. Unless the current lender does not offer a consolidation loan with income sensitive repayment terms, borrowers won’t have any options when it comes to shopping around more attractive offers and companies.

Steps to take on or before July 1st

If you haven’t already consolidated your student loans, contact a student loan consulting and refinancing lender as soon as possible. Go online and compare various online loan companies, read up on loan terminology, use online calculators to understand your potential savings, and get in touch with a student loan consolidation expert with a list of questions.

Student loan consolidation already offers a wealth of benefits, not to mention the newest benefit as a safe haven from the July 1st interest rate hikes. Because payments are combined and spread out over a longer period of time, monthly payments are reduced, freeing up cash flow for young adults who are just beginning their careers. Additionally, having only one open loan is more beneficial in terms of credit rating as opposed to numerous open loans that can lower an overall FICO score.

Refinancing before July 1st still gives students one last chance to lock in low interest rates and take advantage of other soon-to-be cut money saving opportunities and programs.

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The Top 5 Reasons To Stop And Think Before Taking Out A Secured Loan

By Homer Molina

 Secured loans are a popular way of raising funds for homeowners, and there’s no denying that taking one out can be a great way of organizing your finances. Debt consolidation, financing home improvements, even paying for a new car - secured loans can be used for all of this. However, as with any financial agreement, it’s only sensible to take your time when deciding whether to proceed. After all, with a secured loan, you could be betting your home on a successful outcome. So what things do you need to consider before finalizing your application?

Firstly, as just alluded to, it’s an inescapable fact that taking out a loan that’s secured on your home could potentially put your home at risk. Should you fall behind on your repayments, the lender can apply to seize your property, evict you from it, and then sell it at less than market value to clear the debt. Scary, huh?

This is, of course, a fairly rare outcome, and most lenders are happy to work with you if you do get into trouble, using repossession as a last resort, but you should consider this carefully before taking out a loan, especially if you’ll be converting existing unsecured debt into secured though debt consolidation.

The second problem with secured loans is that they tend to be for fairly high amounts, and repaid over a fairly long term. This means that the amount of interest you’ll pay over the entire term may be substantially higher than you might think. Even with a low APR, secured loans aren’t necessarily a cheap option.

Thirdly, if you use a secured loan to wipe out some existing unsecured debt, you may get the illusion that your debt levels have lessened. There’s then always the temptation to use your credit cards etcetera to build up fresh debts, so you now have secured AND unsecured debt hanging over your head, and you’ll be in a worse position than ever before.

A fourth problem with a secured loan is that you’ll by its very nature be removing equity from your home. In other words, the value of your home and the amount of debt secured on it will be much closer. Considering that today’s property prices are at record highs, and that many experts are predicting a fall in the near future, you could then be left in the unenviable situation of owing more than your home is worth - that is, you could fall into negative equity.

The fifth problem we’ll cover is also related to the removal of equity from your home. Should you in the future wish to take advantage of a refinancing offer to reduce your mortgage costs, it helps to have as much equity available as possible in order to secure the best deal. A secured loan now could harm your remortgage prospects in the future.

So has all this put you off the idea of getting a secured loan? It shouldn’t do, as you may still benefit greatly from the financial restructuring one will allow you to do. However, it’s a big decision, and this is why you need to be aware of the possible problems first, so that your decision can be as informed as possible.

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The Top 5 Tips For The Best Rate

By Boyce Gomez

 You’ve got your eye on that shiny new Lexus - okay, maybe it’s a Kia, but it’s perfect and you want it to be yours, all yours - as soon as possible. At the same time, you certainly don’t want to be saddled with paying nearly double the car’s value by the time you finish paying off the car loan. Here are five tips to help you get the best possible interest rate on an auto loan to put the car of your dreams in your driveway.1. Check your credit rating.

If you don’t already know what’s in your credit report, this is a good time to find out. Before you apply for an auto loan, get a copy of your credit report to find out what surprises may be lurking in it. You may just find out that it contains erroneous information that should be corrected, or that there’s something negative on it that can be either explained away or fixed easily with a couple of phone calls or letters. Either way, it always helps to know what the credit reporting agencies are saying about you before you start shopping around for a loan.2. If you have good to excellent credit…

…then you may qualify for special incentive financing available through the car dealer. If the car dealer is offering a low, low finance rate, check all the terms and conditions carefully BEFOREHAND online to make sure that you qualify. Most often, that 1% financing rate is reserved for those who have excellent credit and can afford to do a 12 month financing plan. If that’s you - then grab the deal. 1-2% financing is a bargain if you can handle the other terms and conditions attached.3. If you need a longer term than 12 months or have spotty credit…

…arrange your financing yourself before setting foot on the car lot. Check with your usual bank for a new auto loan first, as they may have better interest rates for those who are already established customers, or who carry all their savings, checkings and loan accounts through one bank. It may save you a few percentage points in interest to do business with someone who already knows you.4. Shop online for the best auto loan available.

At many online credit web sites, you can submit a request for multiple quotes from area finance agencies and lending firms. Simply submit your request for an auto loan quote through an online form, and the web site will submit it to up to four financing firms at once. A representative from each agency will contact you within a few hours to a day or two to discuss your request with you and give you a quote for an interest rate and monthly payment amount that they can offer you. Online shopping for credit makes it easy to compare and pick the best auto loan terms for you.5. If your credit is bad but you need that car…

…one of your best and most often overlooked options is to find someone to cosign the loan for you. In most cases, when you have a cosigner, you’ll get the interest rate that THEY qualify for, which means a lower monthly payment for you.

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