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Getting Private Student Loans to Finance Education

An Introduction to Private student loans

Private student Loans are great loan option to be considered when you cannot obtain other forms of financial aid. Private student loans are financial resource designed to help you pay all expenses of your education and very helpful way to complement your federal student loan. Private student loans are credit-based financial support which you can use to pay any academic costs like tuition, books, room, school fees, transportation and other expenses. Moreover, private loans help you pay additional costs that are not covered by federal financial aid. What makes it different from other student financial aid that the private loan can cover up to the total cost of your education and that in most cases you need to have a cosigner on your application (in that case your interest rate will be calculated based on your credit and your cosigner’s credit). Also, private student loans require a credit check for the primary borrower.

Private Student Loan Benefits

The major advantage of Private Student Loan Plan is flexibility. Private loans give you the elasticity to apply whenever you need financial help during your time at school. Other important benefit is that any creditworthy borrower is eligible to apply for the loan get loan, in contrast to federal loans that are mainly based on financial need (excluding PLUS loan) and student’s status. In addition, this type of loan gives you opportunity to pay for extra costs like transportation, computer, books and other charges. Diverse private loan lenders offer different terms and conditions. We recommend that you discuss these terms and conditions with your lender before signing a contract. Also, ask for benefits and discounts that private lenders offer, since different companies offer different benefits and discounts.

Eligibility Credit Requirements

In order to qualify for private student loan you must be enrolled at least half-time at an eligible school. In addition, you have to be the U.S. citizen or Permanent Resident and your cosigner and you need to have social security number and pass accredit check.

Length of the Process

Usually you should allow 6 to 8 weeks after the application for your school to receive your loan funds.

Private Student Loan Interest Rate

Interest rates under private student loans are calculated based on a published index such as London Interbank Offering Rate (LIBOR) plus extend based on your credit history and score. In case that cosigner is required, your interest rate will be calculated based on your credit and your cosigner’s credit. Since the interest rate is variable, it will oscillate over time.

The best private student loans have interest rates of LIBOR + 2.0% or PRIME – 0.50% with no fees. Unfortunately, these rates often are available to applicants with great credit history and a creditworthy cosigner. If you want to get approved with no cosigner on the loan, you need to prove that you have enough and secure income coming in on a regular basis.

Repayment plans

We strongly recommend that you carefully consider all available loan repayment options when applying for a private student loan.

There are numerous beneficial loan repayment plans offered by different lenders. You should keep informed about these budget friendly repayment options to make your private student loan repayments easier. These repayment plans include full loan deferral, interest only repayment, immediate interest and principle repayment.

Full Deferral

Payment of principal interest starts six months after student lefts school, there is no interest payments during enrollment in school. Interest will continue to accumulate during the deferment period and will be added to the loan at the time of private student loan repayment.

Interest Only

While you are enrolled in school up to four successive years you are going to pay only accrued interest. Principal interest repayments will begin 45 days after graduation.

Immediate Repayment

Payment of principal and interest will begin instantly after the loan is completely paid out.

As a general rule, you should apply for a private student loan only if you have failed to obtain federal student loans or other types of financial aid for students like college scholarships, grants or work-study aid. If you are looking for more flexible financial aid to cover your education expenses you can apply for an uncertified student loan, you can borrow more money because the loan limit is much higher than certified education loans and without any authorization from your college.

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