You’re done with the federal student loan. It’s either you maxed out the money, or you need a more flexible repayment. You’re now looking to the prospect for a private student loan.
However, before you venture any further, you need to know first its advantages and disadvantages.
1.Chance for lower rates
There are many lenders that are willing to offer you a private student loan. You can have your pick in this wide array of creditors. This also means there is a chance you can find lower rates. All you have to do is shop around and do some research.
2.No financial aid eligibility
Not a genius nor a football player? Also, if your GPA is constantly falling down, you can always turn to a private loan.
This kind of loan doesn’t require eligibility in regard to your academic performance. With this, you don’t have to worry anymore about maintaining a certain GPA.
- Higher limits
A federal student loan is known to set limits on how much you can borrow. They can limit it by term or by month. A federal loan can stop you from buying what you really need.
While on a private loan, you can enjoy higher limits. This way, you can have the money you need, but make sure that you spend every cent wisely. Larger limits doesn’t mean you can be a spendthrift while in college. It’s better to pay it as early as possible so it doesn’t accumulate higher interest.
If you meet the lender’s criteria, you can expect a quicker application process as they do not require the student to file the Free Application for Federal Student Aid (FAFSA), so one less thing to worry about.
1.Harder to qualify
As mentioned above, you don’t have to be a stellar student to get the loan; however, there is another set of criteria you need to meet.
You need to have a good credit. I know you’re a student which might mean you don’t establish yet a good credit history, so when you have a lower credit or a non-existent one, you can get a cosigner to backup your application, and your cosigner also needs to have an excellent credit.
Thus, unless you meet these requirements, you will have a hard time applying for a private loan.
2.Higher interest rates
I told you! You might have the chance to discover lower rates, but this doesn’t mean that all providers offer affordable rates.
You need to remember that these are private lenders. They earn money out of your loans, so when you embark on this, make sure that you search high and low for the best deals.
The private loan also makes way for fees. These can vary from one provider to another. Such fees can be origination fees or prepayment penalties.
If you fail to make the payment on time, don’t expect a support squad like the Federal to help you.
In private loans, you’re on your own. You’re the captain of your soul. You aim high or sink low. The point is, there is no subsidy like forgiveness program to assist you in times of financial hardship.
Think hard about this matter. A student loan can be a monster when you lose control of it, but if you’re really sure on switching to a private one, this list of the best private student loans might help you BIG time. Best of luck!