Many ?f the government student loan programs require n? credit check ?nd w?ll provide students w?th substantial financial aid. however th??e programs are n?ed based and norm?lly carry additional criteria that ma? make ?t hard t? qualify. Even when students do qualify, th? loans w?ll only cover a portion ?f the total education bill ?n the majority ?f cases. if students ?r? caught ?n th?s position then the? ?ould lo?k t? private alternative student loans t? meet th? shortfall.
Private alternative student loans t?o hav? th??r own difficulties. A credit check i? alm?st universally required and th?s i? not a problem a? long ?s ??u h?ve ? good credit history. the problem is th?t ‘good’ ?? v?ry mu?h a relative term ?nd if y?ur credit history is not good en?ugh then ?ou may find that y?u ar? paying m?re th?n th? normal rates of interest.
As w?ll ?s the stated interest rate there ar? further monetary implications of private alternative loans. Fees will oft?n be added ?n to nominal loan amounts ?nd ? r??sonabl? modest loan of $3,000 might easily h?ve fees of 4% added prior to distribution. that means $120 of th? total loan ?s n?ver seen by th? borrower but nev?rthel??s h?d got to be paid back. As a guide, ?v?r? 3% of fees ?s equal t? 1% on top of th? normal interest rate.
Private alternative loans do carry ?ne or tw? advantages.
The f?rst ?nd prob?bl? most obvious advantage i? th?t money i? readily available. Private lenders make a profit from the interest and fees that they charge ?nd s? h?ve an interest ?n making money ava?lable t? borrowers and w?ll work hard to ensure th?t ever? applicant qualifies. on the ?ther hand Federal lenders operate t? ? rigid set of criteria ?nd th?r? is usu?ll? no appeal if ??ur loan application ?? denied.
Not h?ving to deal w?th that cold ?nd frequently illogical bureaucracy ?? an?th?r benefit ?f private loans. Private lenders operate customer service departments th?t exist specifically to deal w?th questions ?o that customers ??n g?t the answers that th?? need. Federal loan programs u?uall? h?ve h?l? ?v??l?ble t?o but the answers ?ne g?t? ?r? hit ?r miss when ?t ??m?? to quality.
Other things which make private alternative loans part??ul?rly desirable include:
The fact th?t students and parents do not hav? t? fill ?ut FAFSA (Free Application for Student Aid) forms ?nd supply ? lot of additional documentation. Alternative loan applications tend t? be simpler and th? whole process ?? easier. But, fees and interest rates ?ould be higher or lower depending ?n th? specific loan program.
The mo?t sought ?fter private loans w?ll have z?r? fees ?nd rates of interest that ar? ?b?ut equal t? th? prime rate. the ‘prime rate’ is th? rate which banks charge e?ch ?th?r ?r th?ir largest and m?st favored customers. if ??u ?r? ?ble t? find a rate at prime then th?? ?? ? good deal and finding a rate at 1% b?low prime ?s a great deal.
To g?t th?s sort ?f loan ?t is usu?lly n??e???r? f?r ?ou to hav? ?n excellent credit history or h?v? ? co-signer wh? h?s an excellent credit history.
Finally, th? b??t way t? discover wheth?r an alternative loan w?ll suit ??ur purposes i? to go ?ut into th? marketplace ?nd se? ju?t wh?t ?s ?n offer.