Private Student Loan
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Private Student Loan
A private student loan or alternative student loan as they are sometimes referred to is a commercial loan offered by private lenders or financial institutions. Private student loans are an alternative to federal student loans, however college bound students looking for funding should exhaust all of their federal student loan options before applying for a private student loan. Private student loans are more expensive than federal student loans but much more cost effective than regular lines of credit. Private student loan lenders charge higher variable interest rates than a federal loan charges, and they may add additional loan fees as well. One of the biggest drawbacks to funding your education with a private student loan Because private student loans are secured by the lender, you will be required to pass a credit check. The lender will review your ability to repay the loan and assess the risk. If you have bad credit or haven't established credit, the lender may deny your loan or require a cosigner. The fees associated with securing a Private Student Loan can significantly increase the total cost of the loan. A student loan with a comparatively low interest rate but higher fees can ultimately cost more than a loan with a moderately higher interest rate and no fees. Student loan lenders that do not charge fees make up the difference in charging higher interest rates, so beware of that while shopping. A good rule of thumb to follow is that 3% in fees is about the same as a 1% higher interest rate. Be wary when comparing student loan rates and fees, different repayment terms according to APR, as a longer loan term reduces the APR despite increasing the total amount of interest paid. The best private student loans will have interest rates of LIBOR + 1.8% or PRIME - 0.50% with no fees. LIBOR is the 3-month average of the London Interbank Rate and is the average interest rate paid on deposits of US dollars in the London market. PRIME is the Prime Lending Rate as published in the Wall Street Journal. This is the rate banks charge their most creditworthy customers. Private student loans with these type of competitive rates are comparable to the Federal PLUS loan, but unfortunately are only available to borrowers with great credit scores or have a creditworthy cosigner. Take a look at the TOP 5 Private Student Loan Lenders and see how they compare: 1. Bank of America offers Private Student Loans to undergraduate and graduate students with a great Libor Rate of +1% while attending school and no fees. 2. Chase Private Student Loans are very competitive as well, they offer three different type of Select Student Loan with no fees and a Prime rate of -.50%. 3. Citibank Private Student Loan Program offers students many low interest financing options. Their CitiAssist Graduate, Undergraduate and Law and Bar Study Loans are very competitive and they have no fees as well. 4. Fifth Third Bank also Delivers Private Student Loans at affordable rates. They have three signature Student Loan options to choose from with a Prime rate of -.1% with is the cheapest I’ve seen. 5. Sallie Mae Offers the largest selection of Private Student Loan Financing. They have competitive rates and are the nations leading student loan lender. If you have to supplement your education funding with a private student loan, you should definitely check into Sallie Mae. The Sallie Mae Private Student Loan Program is extremely versatile. They offer 5 private student loan variations including the most popular Tuition Answer private student loan. The Tuition Answer loan is a great way to bridge your education financing gap after federal student loans and traditional financial aid have been considered. It is a practical, private student loan that allows creditworthy students or those with a creditworthy cosigner to borrow $1,500-$40,000 per year to cover absolutely any qualified college-related expense. Sallie Mae also offers 8 amazing private student loan options for graduates. Grad school can be very expensive, especially if you can’t find affordable financing. Sallie Mae borrowers enjoy a variety of repayment plans, low interest rates, and competitive fees. To Read More Click Here
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