Private Loans – The alternative education loan for students in need of additional financial assistance
One of Uncle Sam’s greatest gifts to the American student is the federal student loan program, which enables millions of young Americans to pursue higher education. But federal student loans may not always cover tuition and expenses 100%. That’s why so many parents and students are turning to private student loans to fill the gap.
Private Student Loans – Not Just for Tuition!
All the talk these days is about the higher cost of college tuition. But what’s often overlooked are all the other college costs that can make going to college more financially crushing.
However, this may not be a problem for you, as most private loans can cover virtually all college expenses, including: o Room and board o Off-campus housing o Registration fees o Textbooks o Laptop/Internet access o Travel expenses, for get to and from classes
How can you qualify for a private loan?
Since private loans are made by private institutions such as a bank or other private lending institution, your ability to get a loan will be based on merit, specifically good credit, essentially a high enough credit score. Having a co-signer with good credit is even better from the lender’s point of view, because when the co-signer’s good credit is taken into account, your overall likelihood of repaying the loan is higher. So the lender is more likely to approve you for a private loan.
If you think about it, most consumer loans require collateral, such as a house or a car. If the borrower defaults on the loan, then the lender can repossess your property so they can sell it to recoup the money they lent.
In the case of education loans, there is really no collateral; i.e. How can a creditor get his education back? It can not. This is why lenders rely on a good credit record, as it is a strong indicator that you and/or your co-signer have a proven track record of paying off your credit cards or other loans in a timely and responsible manner.
Co-signers with good credit can help you qualify for a private loan, lower your borrowing costs, and improve your own credit score!
Because private loans are merit-based, the rate you receive is based on your credit history and income. If you don’t have one, the other, or both, having a credit-worthy co-signer can be invaluable. In fact, a co-signer with good credit can help you get a private loan with a lower interest rate, saving you a lot of money over the life of the loan.
Another added benefit of a creditworthy co-signer is “guilt by association, but in a good way.” This means that paying off your personal loan under a co-signer agreement on time and responsibly will be a positive way to build your own credit record.
Take advantage of the benefits of a private loan
Of course, the main purpose of getting a student loan is to help you get a good education so that you can realize your career aspirations. And judicious use of credit is important. That’s why we encourage you to first look into as much federal student aid, grants, and scholarships as you can before applying for a private loan.
Private Loan Application Process – Get Pre-Approved in Minutes If You Qualify!
However, once you determine that a private student loan can be a viable alternative source of financing to cover the gap in your education, you may be pre-approved for a private loan within minutes of applying! Many times the application process is very simple and with most lenders it can even be done over the phone or online.
Longer prepayment terms and no prepayment penalties can help you better manage your cash flow after college
When it comes to paying off your personal loans, many lenders give you up to 20 or 25 years to do so. No prepayment penalties mean that as long as you make your minimum monthly payment, you can pay off your loans as quickly or as slowly as you like within the repayment term.
Interest rate discounts can help you lower your personal loan borrowing costs even more!
Many private lenders would love to have your business. So be sure to shop around and ask each lender about these and other “borrower benefits” of a private loan, such as:
o Interest rate discount for automatic payment from a savings or checking account
o Interest discount for simply making timely payments.
o Little or no upfront fees if you or your co-signer have good credit
Who is eligible for a private loan?
Keep in mind that each private lender has certain eligibility requirements. For most private student loans, you must meet the following criteria:
– Must be a creditworthy applicant or have a creditworthy co-borrower
– Must be a US citizen, US permanent resident or international student with a qualified US citizen or US permanent resident, co-signer
– You must be of legal age according to your country of residence (usually 18 years old)
– Can be a full-time, part-time or less than half-time student (including continuing education).
Types of private loans
The great thing about private loans is that many lenders offer a variety of loans that are tailored to suit your particular course of study. The name of the loan, the minimum and maximum loan amount and the loan repayment terms are tailored to the typical needs of the course of study you have chosen to follow.
Private student loans – Just as the name suggests, apply for a private student loan if you are a college student or attending a career, technical or trade school in the US, at least part-time. Private loans for continuing education – This private loan is right for you if you are completing a degree, certificate program, or taking classes to further your career or for personal development. A private continuing education loan is available to you if you attend an eligible school at least part-time (less than half-time). Graduate/Professional Private Loan – If you have decided to pursue an advanced degree at participating colleges and universities and plan to attend at least half-time, then this private loan can provide you with the funds you need to achieve your educational goals. K-12 Education Private Loan – If you are a parent or other adult sponsor (relative or friend) of children attending participating non-public elementary schools, many lenders provide these loans to help cover costs. Most lenders provide private K-12 education loans for students who attend private, religious, preparatory and military or special schools.
Need more money to pay for college? Private loans are here for you!
Now that you’ve learned about an alternative way to pay for your college-related expenses, don’t let anything stop you from pursuing the dreams of success you want. A great education is a wonderful thing and nothing should stand in your way of achieving your goals.
When you start or continue your education, the availability of private loans offers you the opportunity to fund your education when you don’t know where else to turn for the money you need.
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