Private student loans can be received by the borrower in order to augment the amount of money that can be obtained through federal student loans. In many cases, federal funds are not sufficient in paying for college, making private loans an excellent choice.

A student should ensure that they only borrow as much as they need and no more. These loans can be used in order to cover any amount that is not covered by financial aid.

Facts

• The payments for the loan are able to be deferred during the period in which the student is in school.

• The application process requires a credit check.

• The private loan is obtained in the name of the student, sometimes using a co-signer.

• Money that is borrowed privately typically has higher limits.

• The interest rates of these types of loans are competitive.

Applying for the Loan

There are many types available as well as varying fees and interest rates. Because of this, it is essential that a person consider all of the options before making a choice.

Another item to consider is the Annual Percentage Rate (APR) which includes the costs that accompany the initial amount that is borrowed. Fees and interest rates should be considered, not just the interest rates. Some lenders will offer low interest rates, but also charge fees for the loan. Remember that the total due will always be more than the amount that is originally taken out. The APR takes all of this into consideration. Keep in mind that a school loan that has shorter terms of repayment will ultimately cost less.

Because the economy is currently suffering, a cosigner is usually necessary for applications to be approved. Not just everyone is able to be a cosigner. It needs to be someone who has a high credit score, usually over 700, and a steady source of income.

After a lender has been chosen, the lender can be contacted via a phone number or online. Many sites have an online application that can be submitted. The approval process and the processing of the applications will vary largely depending upon the lender, so it is not possible to put a definitive timeline on the procedure. Some available lenders will provide the borrower with the ability to complete the process entirely online so that the funds can be received more quickly. Some financial institutions will mail required documents to the borrower's home so that the application process can be completed. The final step is to accept the bank or financial institution’s terms of repayment.