Absolutely, it is still possible to take out both federal and private student loans during the Corona Virus pandemic. If you have to borrow money for school, the best idea is to start with student federal loan options before opting for private student loans to help fill any gaps left.
Private student loans are separate from federal student loans since they are offered by private lenders such as banks, credit unions and online private student loan lenders.
The interest rates and terms on private student loans vary depending on factors such as:
- Your financial situation
- Credit history
- The specific lender you choose
An interest rate is basically the cost of borrowing money. It is normally calculated as a percentage of the loan and is periodically tacked onto your unpaid balance.
Typically, your monthly payment goes toward paying interest first before the rest is allocated towards paying the principal (the loan amount you initially borrowed).
Getting a low interest rate will help you save money over the life of the loan and thus pay your debt faster.
To apply for a federal student loan, you will need to fill out the Free Application for Federal Student Aid (FAFSA) .
Furthermore, families whose income has been adversely affected by the pandemic might be eligible for additional federal, state or other school-based financial aid. Communicate with your school’s financial aid office for a full list of all the resources that may be available to you.
Fixed-Rate Student Loans
Fixed-rate student loans have a consistent interest throughout the loan term. In other words, the interest rate on the loan when you first borrowed it will be the same rate you pay at the end of the repayment period.
In general, fixed-rate student loans are considered a safer option since there is no chance the interest rate will increase over the life of the loan.
Pros of Fixed-Rate Student Loans
- They are not influenced by changes in interest rate in the market
- The monthly payments stay consistent throughout the loan term, unless the borrower wishes to pay more.
Cons of Fixed-Rates Student Loans
Fixed-rate student loans normally have a higher starting interest rate compared to variable loans. As a result, you could miss out on the initial savings in case the variable interest rate starts lower than the fixed one.
Variable rate (or Floating Rate) Student Loans
Note that all federal student loans have a fixed interest rate. You can only access loans with a variable interest rate from private lenders such as Marrick Finance.
As the name suggests, variable rate student loans have a changing interest rate, and what you pay at the start of the loan is not necessarily what you will pay by the end of the term. The rate of interest on these loans is influenced by market conditions and can either increase or decrease. As a result, they are considered a riskier loan option compared to fixed rate loans.
In general, you are eligible to borrow up to 100% of you cost of attendance (what your school says it costs both to enroll and attend classes), minus other financial aid and/or loans you have already received.
The specific amounts of money you can borrow will vary from one lender to the next and may include annual or other cumulative borrowing limits. There are other criteria that most lenders use to determine how much you can borrow such as:
- Credit history
- The credit quality of your cosigner
- Your school’s cost of attendance
- The degree you are studying for and more.
You can apply for an online private student loan at any time since unlike federal loans like FAFSA (link), they do not have an application deadline. Nonetheless, it is still prudent to apply for a private student loan as soon as you are sure that you will need one to cover the cost of your education.
Although it varies widely between lenders and which school you are in, it can sometimes take up to 5 weeks for you to receive the funds. Therefore, if you were wondering when is the right time to apply for a private student loan, sooner is better than later.
When it comes to qualifying for a loan, each lender will have varying requirements for a private student loan. But typically, this is what you need:
- A qualifying credit score (or a co-signer with one) (not necessary at Marrick Finance)
- A qualifying income and debt-to-income ratio (DTI) (or a co-signer with one)
- Be a student in an eligible education program
- Be a U.S. citizen or legal resident with a Social Security number
- Be at least 18 years old
- Use the loan for educational purposes only
You can get a private student loan with bad credit with some lenders such as Marrick Finance. However, note that sometimes you may require a co-signer.
Federal loans do not need a credit check but many private student loans do. Many students get locked out of private loans if they do not have a cosigner because most have not yet built their credit but not at Marrick Finance. We give a chance to everyone, come give us a try.
Normally, the lower your credit score, the higher the risk to the lender. As a result, you would be charged higher interest rates. One of the ways to reduce your interest rates is by adding a cosigner who has a good credit history to your loan application.
It depends on certain factors, but in most cases, yes. You do not have to add a cosigner unless you are under the age of majority in your state (normally between 18 and 21 years). However, if you have poor or limited credit, most lenders will require a creditworthy cosigner to balance out their risk on the loan before they can approve your application.
Moreover, more than 90% of private student loans taken out by undergraduate students have a co-signer. Even if you are a graduate student and may not need a co-signer, adding one with good credit can boost your chances of qualifying for a bigger loan amount as well as lower interest rates.
Marrick Finance makes it easy to compare co-signers. That way, you can decide which co-signer can help you get the best rates.
When choosing between private student loan options, it is important to consider as many lenders as possible. By doing so, you stand better chances of finding the most suitable loan for you. Here are some things to consider:
You want to go with the lender with the lowest interest rates to save on costs. Your credit as well as the repayment period you choose will both influence your interest rates.
The terms of your loan will vary from lender to lender. For example, Marrick Finace offers loan terms that may range between ** to *** years. It’s a good idea to choose the shortest loan term you can afford since this will save you a great deal on interest charges. Choosing a shorter loan term may also help you land lower interest rates.
Some private lenders will let you loan up to your school’s cost of attendance while others have capped loan maximums beyond which you cannot borrow. Be sure to choose a lender that will deliver the loan amount you need.
Most lenders charge fees which can add to your overall cost, for example:
- Application fees
- Origination fees
- Disbursement fees
- Prepayment penalties, etc.
Keep in mind tha if you take out a loan with Marrick Finance, you will not have to worry about any of the above fees.
You may be eligible for rate discounts from some lenders. For instance, many lenders offer a discount if you opt to sign up for automatic payments. Others offer a discount if you have taken out a loan with them before.