Locating a Low-Interest College Loan
Whenever you are looking for a student loan you'll want to find one that has a low-interest rate. This will make a huge difference particularly with student loans, because they tend to be large.
Applying for the lowest interest rate you can find is very important. It will save you a great deal of money. For example, if someone obtains a 6,000 dollar five-year loan with an interest rate of 10%, he will owe $127.48 per month. Whereas, if another college student obtains the same exact loan for the same exact time period (5 years) with 6% interest his monthly payment will be only $116. That is more than a $10 per month difference! When the loan is finally paid off, the individual who had the 10% interest rate will have forked out $688.86 more than the individual with the 6% interest rate. That's a lot of money, especially for college students.
Finding a low interest student loan may be a little tricky but well worth it. To help you, here's a list of things that'll allow you to obtain a low-rate loan:
-Offer Collateral: Generally banks approve loans faster if you pledge your house or car as collateral. The problem is that the majority of college students do not have a house and a few do not even own cars. If you are one of those students who does not have a house, car, or other form of collateral, consider asking your parents to take out a loan for you.
-High credit score: If you have proved in the past that you can repay loans (whether credit card or other) banks will be more likely to lend you money because they feel a greater security in getting it back.
-Proof of successfully closing loans: If you've successfully paid off a previous loan, take proof of that to your lender when you go to take out a new loan.
-Have a job: When the bank is certain that you have a steady income, it will increase your chances of obtaining a loan.
Federal student loans (Stafford or Perkins) usually have lower interest rates than private student loans.
The Stafford student loan offers lower interest rates than a private loan or alternative student loan, but a little higher than the Perkins loan rate. Stafford student loans are for those who are enrolled in college at least half-time and the Stafford loan has a variable interest rate that's adjusted every 12 months.
Perkins Loans provide a low interest rate of merely 5%, and are available on a first come first serve basis. However, these loans are only available to students in extreme financial hardship situations. These Perkins college student loan payments span over 10 years and may be discharged under particular circumstances.
Low rate student loans can be found if you understand where to look and what the requirements are.
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Being a college student herself, Elise Fisher enjoys writing articles for her website About Student Loans. Be sure to check out the Low Interest Student Loans page.
