How Can a Student Apply for a Personal Loan?

A personal loan is touted as one of the best ways to get funds in times of need. And this is the truth because it stands as one of the loans that could be granted by the lenders with or without collateral from the borrowers. However, when this loan comes without collateral, lenders try to make up for the security they fail to get from the collateral by looking at the credit history of the borrower and setting the interest rate accordingly. This makes it one of the loans with the highest interest rates. Students are among those that will always need money for different reasons, and because most of them cannot lay their hands on any collateral to present for the loans, this becomes one of the best options to consider.

It is good to note that in most countries there are several forms of financing, available to students. Apart from personal savings or funds that come from their parents or other acquaintances, students can also get funds through gift aid that will normally come as grants or even scholarships. They can also apply for the student loans given by the state or federal governments. In Australia for instance, there is a student loan system—HELP—given for local students. This covers some amount or their full tuition and they are allowed to start paying back when they start earning up to a stipulated amount. In the same bid, the United States also has student loans given through the FAFSA form.

But in most cases, because the student would have to take care of other things like books, housing, feeding, travel and other expenses that come with living and studying, the money gotten for these not suffice. These loans are barely enough for tuition, not to talk of other expenses. At this juncture, other means of funding becomes inevitable and the personal loan for other ancillary costs comes handy.

How to Approach Personal Loans as a Student

Most importantly, personal student loans should come as the source of the needed funds when other sources are not able to cover all the needs of the student. However, when going for this, the student should be very careful.

To ascertain if they need a personal loan, students should first of all go for the other scholarships and funding available to them. When they’ve gotten these, they can now work out the amount they will need from personal loans. They should do this by subtracting whatever they get from federal loans, scholarships and grants from the full cost of their books, room, tuition, travel, feeding, and other living expenses. When they do, the remaining amount will stand as the total of needs that are not met by the finances they already have. That is the amount they should source from the personal loan providers. This calculation is very necessary because some students may make the mistake of borrowing more than they need and lavishing the money on unnecessary things. This will pile up burdens for them, and it is not always easy to pay off these loans when they start working.

They must also research well, so as to choose the best lender. This should be based on the rates and how flexible the repayment plan is. Students should only assent to any loan when they’ve understood the entire fine prints.

Who Qualifies For a Personal Student Loan?

It is also good to know that the available student loan options may not be as easy to get as other private loans. Because of this, they normally come with strict qualification criteria. It has been established by authorities that there are mostly more restrictions for people allowed to take out personal loans as students. So, not all students may qualify for this.

• A personal student loan is for students, who run at least a part-time degree program in a vocational school, college or university.
• The credit history of the student must be solid.
• When students do not have a credit history or have but a bad one, they must have a consigner.
• A promissory note that guarantees repayment of the loan and the interests must be signed by the student and the consigner.
• In most cases, individual lenders will require students to show proof of income.

Also bear in mind that once the loan is approved and the funds released, the interest will start piling up till the end of the term of the loan. Here, you will normally have higher interests because there is no collateral. The loan principal is added to the accumulated interest if the student chooses to go for a loan deferment.

Applying For a Personal Student Loan

The next thing you need to do after conducting the necessary checks and making sure you need this loan is calculating your credit rating. It will help you to be aware of what terms of possible interest are the most probable in your case. Get in touch with the bureau for this and they will send you a free online report.

When you have the report and sure that you can handle the possible interest, gather all the necessary documents for the application. They will include your ID card or passport, your proof of residential address, payslips of the last places you worked or are working if there are any or bank statements of the last few months. Of course, your parents’ statements or payslips can stand for you here.

When you have all these, you will need to search for the best loans that will fulfill your needs without putting too much pressure on you.

When you have the lender of choice, you should go for the cosigner.

When you have all these, you can now apply for a personal loan as a student.

The Best Lenders to Use as a Student

Personal student loans normally come from traditional lenders like banks, savings and loans, and credit unions. In the United States, for instance, banks like Wells Fargo, SunTrust, and Bank of America are among the best lenders. However, other peer to peer lenders also abound. The credit history of students is normally limited. This makes the peer to peer lenders the most feasible option. But they also come with their own troubles, and so students would need to be careful when choosing them.

1. Choose lenders that have student loans as their specialty.
2. Consider the prepayment penalties and hidden costs.
3. Check about possible deferment options with the lender while you are still studying.
4. Also, consider the range of the loan allowances.
5. Consider discounts for payments with automatic withdrawal.
6. Check for the possibility of consolidation for the loan upon graduation.

All these will help you determine which lender to use when in search of the personal student loan. The lender that offers more favorable conditions based on your circumstances would be the best for you here.

Conclusion

Personal loans for students are very beneficial when the student fails to get all needs covered by another available loan and scholarships. But caution must be taken to avoid getting into personal loans that will spell trouble for the student in the future. That is why the student must take into consideration the unmet needs, their credit history, the repayment plan, and future lenders before going for a loan.