Opting for a private loan consolidation enables you to take advantage of the fixed interest rates in the first place. But it may not be the same with all lenders. While some provide fixed rates, others adjust their interest rates either on a quarterly or on a half yearly basis on a private loan consolidation.

Interest Rate:

The interest rates are based on the London Interbank Offered Rate (LIBOR). A percentage of margin is added to the LIBOR index and altered every time there is a change in the index. This margin is generally between 2 to 3% initially. Some lenders disclose the margin percentage. After the first year, long term margin percentage is applied which is at least twice the initial margin rate. This results in a change in the interest rate applicable on the loan which is generally between 11 to 12%. A rate discount is offered on interest rate where the payment is made by way of an electronic debit from the savings account. It varies from quarter to half a percent.

Repayment Terms:

Repayment term is considered solely on the amount of loan outstanding. Where the outstanding amount ranges from $7,000 to $30,000 the maximum period allowed is 25years and where it is $30,000 and more a 30 years time span is offered.

Monthly Installment:

While the repayment time is fixed based on the loan liability, the repayment method depends on the financial condition of the borrower. On the one hand a regular principal plus interest method is available where the equated monthly installments include both the principal and interest right from the first installment and on the other hand an interest only repayment option is available where the monthly installment amount will include only the interest portion for the first 24 installments after which it is converted into principal plus interest method.

Private Consolidation:

Normally consolidation involves no processing fee. Depending on the credit score of the borrower a fee called origination fee is levied varying between 0 to 2%. On a successful 48 on time payments this origination fee is cancelled or waived if at all any amount has been levied.