How to compare private loans?
You should begin researching the various private loans available. Make sure when you consider the loan terms, you compare apples-to-apples so that you can make the most informed decision possible.
For each private loan that you research, find out the following information:
- Interest rates: What is the interest rate on the loan? How often does it vary and how is it calculated? How does obtaining a creditworthy endorser or cosigner affect the interest rate? When does interest begin accruing? If you cannot afford to make payments while attending school, will the lender postpone payments and allow the interest to be capitalized (added to the principal)? if so, how often will capitalization occur?
- Loan fees: What are the loan fees? How are they collected — are they charged on top of the requested loan amount or subtracted from the total loan amount to be disbursed? Will you be charged a fee when you enter repayment? Are there fees associated with prepaying the loan?
- Repayment terms and period: When will you begin repayment on the loan? Can repayment be postponed until after you graduate or leave school? What are your various repayment options and what are their advantages and disadvantages? How long will you have to repay the loan? If you use the maximum or minimum repayment period, what amount of interest will you pay over the life of the loan? What is the charge for a late payment?
- Repayment incentives: Are there any rewards for a certain number of on-time payments in terms of principal reductions, interest rate reductions, or forgiveness of remaining balances below a certain amount?
Category Article Private Loans
