Private Loans are private loans through a lending institution. These loans are not part of the federal loan program and are more expensive than the federal guaranteed loans. Students and parents should research all options including scholarships, grants, work-study and federal loan programs before borrowing from a Private Loan program. If you decide you need to use a Private Loan, be sure to review all of the loan options and pick the loan that best suits your needs. Remember—borrow only what you need!
Things to Look for in a Private Loan
- Annual Percentage Rate (APR)—The APR is the annual cost of your loan including the effect of any fees, charges in addition to the interest. The APR will differ based on the terms and loan amount. The APR may be a variable rate and can increase after consummation of the loan.
- Repayment Incentives—Does the loan reward borrowers who make payments on time? Does the loan offer incentives for automatic payment from your checking account?
- Loan Limits—Does the loan have an annual or aggregate limit? Can you afford to make payments based on the loan limit? It’s a good idea to stay with the same lender each year. Make sure the loan can cover all your costs throughout your education.
- Repayment Period—The lengths of repayment periods vary. If your cost of education requires you to borrower larger amounts, you may need to have a longer repayment period.
- Lender for Federal Loans—Does your Federal Stafford lender offer Private Loans? It may be easier to borrow your Private Loans through the same lender. Some lenders can even combine the billing for loans so you only receive one monthly billing statement.
- Pre-approval—Does the lender offer loan pre-approval over the phone or Internet?
- Co-signer Requirement—Does the Private Loan require you to have a co-signer? If you can’t find a co-signer, you will need to find a different loan that you can borrow on your own. Sometimes having a co-signer will reduce the amount of loan fees.
- Co-Signer Release—Does the Private Loan offer a co-signer release after you have made so many on-time payments.
- Interest Capitalization—If you choose not to pay the interest on your loan while you are in school, the interest may be capitalized (added to your loan balance). If the interest is capitalized, is it capitalized annually or at repayment? Interest capitalized annually is more expensive than if it is capitalized only once at repayment.
- Repayment—Does repayment begin immediately or after you graduate or leave school? If you can’t afford to make payments while you are in school, be sure to get a loan that does not require payment until you are out of school. If your payments begin after you leave school, any payments you can afford to make while in school will help to reduce your overall loan balance.
Give Yourself a Credit History!
Lenders use your credit history to make decisions on which applicants are likely to repay their loans on-time. Credit scoring is calculated using many pieces of your past bill payment history (number and types of accounts, late payments, outstanding debt, and the age of your accounts). The way you have handled credit in the past is often a good indication of how you will manage credit in the future. Therefore your credit score is like a snapshot of your level of credit risk. When your credit information changes, so does your credit score. Pay your bills on-time, pay down any outstanding debt and avoid taking on new debt or applying for too many new credit cards.
Private Education Loan Lender
There are many private education loans available to students. Students interest in taking out a private education loan can locate a lender in one of two ways:
- Google Search – Private Education Loans
- Contact a local financial institution to see if they offer a private education loan.
If you have questions regarding private education loans, you may contact our office at 208-459-5328.