Benefits Of Repayment

Written by Mark Sanfilippo
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In all the talk of student loans and loan repayment, it's rare that anyone talks about the actual benefits of repaying your loans. There's of course the obvious feeling of relief to have your loans repaid, but there are also some very real advantages to repaying your loans. Let's take a brief look at some of them.

Far and away the biggest benefit of repaying your loans is that you can avoid going into what is referred to as default. Being in default means that you have effectively stopped paying your monthly loan payment and you should understand that default is serious business to the lenders. This may sound initially like negative consequence rather than a benefit, but there are some real benefits for not going into default.

First and foremost going into default grants the lenders the right to report your default status to the Credit Bureau. This will give you a major strike against your credit rating and while you may not be in the market for a new car or home in the near future, your poor credit rating is likely to haunt you well into the future. Even if you start making your loan payments again, the strike against your credit will more than likely remain on your report for several years.

Paying Off Your Loan Helps You Get Future Loans

So far all of this sounds very negative. The positive side to paying off your student loans is that you can actually boost your credit rating. If lenders see that you've consistently paid a loan debt, then they will consider you a better risk for a large loan. If you are having trouble paying your college loan debt, you might want to consider loan consolidation. Consolidation can allow you to lower your monthly payments and it will in no way harm your credit rating. That way you can make your payments and build up a good credit rating without putting yourself in further financial difficulties.

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